6 answers on behalf on Topglove Boss as he announces over RM1b quarterly profit today.
Respond to TheEdge(@ Syahirah Syed Jaafar & @Kathy Fong)
1. Vaccine, a curb on glove demand?
-Vaccine is NOT a cure. You can get infected even with vaccine. The Top 10 pharma can qualify my statement.
-You need glove for each vaccine handling which promotes more glove usage worldwide. Vaccines can last between 6 months to 1 year depending on the vaccine efficacy.
[8 billion vaccine=8 billion glove]
[16billion vaccine=16 billion glove]
This vaccine actually creates more demand for gloves.
Think about it.
2.Stockpile on gloves
A question that only TheEdge's reporters will question.
If government, hospitals,etc are stockpiling for future usage, then there would not be any urgency to purchase at SPOT PRICE(>3 times pre-Covid-19 pricing). It seems that many are willing to pay 30%, 40% and even 50% downpayment to ensure that they secure the required gloves.
Think about it.
3. New entrants, a cause of oversupply
At this moment, new entrant combine worldwide would not even create a dent to the worldwide demand for 2020 which is at 330 billion gloves(According to MARGMA).
How long would newbies require to create 33 billion new gloves capacity which is about 10% of the global demand?
1 month?, 3months?, 6 months?[The answer is more than 18 months]
4. Will US Customs detention order be revoked by year-end?
The answer is 6 months or less from mid Jul 2020. Refer to US CBP website for WRP Asia Pacific Sdn. Bhd.
We can based on WRP Asia Pacific as a benchmark since Topglove is using the same consultant with WRP Asia Pacific.
Note: US is in dire need for gloves and other PPE.
5. Migrant workers issues
Topglove will definitely be having shortages for glove manufacturing in this pandemic period. However with new automation coming on board with each new production line, less workers will be required.
6.Share buyback scheme
Topglove share buyback scheme is less than 20% of the net profit in Q4FY20 and will be less than 3% if you annualised it based on full year profit for 2021.
The company will managed the growing cash pile in a transparent manner.
Topglove is listed in BURSA MALAYSIA and the company's plans are spelt out in the quarterly report,annual report, AGM, EGM and press release.
Based on latest quarter result press release:
To reward its 57,000 public shareholders following the Group’s remarkable performance, the Board
recommended a final dividend of 8.5 sen per share, amounting to a payout of approximately RM691.8
million. This brings the total FY2020 dividend payout to 11.8 sen per share, amounting to a total
payout of approximately RM961.2 million. The total dividend of 11.8 sen represents an increase of 9.3
sen or 373% over FY2019, which is a net profit payout ratio of 51%.
The healthy cash flow generated by the excellent performance enabled the Group to lower borrowings,
which led to a 33% savings in terms of interest cost. Over the course of FY2020, the net cash flow
generated from operating activities was RM3.17 billion compared with RM0.53 billion in FY2019, an
impressive increase of 500%. This has considerably strengthened the Group’s financial position, which
enabled the Group to fully settle its syndicated loan of RM654 million during the year.
The Group has earmarked RM8 billion for CAPEX over the next 6 years from FY2021 to 2026, which will provide us with additional capacity of 100 billion pieces of gloves. The RM8 billion CAPEX will be invested in new capacity,
enhancement of existing manufacturing facilities, a gamma sterilisation plant, land bank for future
expansion, Industry 4.0 digitalisation and improvements to our workers’ facilities.
In Summary, @ Syahirah Syed Jaafar & @Kathy Fong from TheEdge, it may not be too late for both of you to be a shareholder of Topglove.
-Beware of some old man blogging DAILY!! and a female blogger that speaks to old man called "sifu". I believe most of you WILL NOT READ their article because many of you are SMARTER and more KNOWLEDGABLE.