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Top Glove tumbles 7.8% ahead of 1QFY22 results on Friday

KUALA LUMPUR (Dec 6): Shares in Top Glove Corp Bhd sank 22 sen or 7.83% to hit an intraday low of RM2.59 on Monday (Dec 6) ahead of the release of its results this week for the first quarter ended Nov 30, 2021 (1QFY22).

At the opening bell on Monday, Top Glove opened four sen lower at RM2.77 and continued to drift lower towards the noon break. It saw a total of 18.75 million shares changing hands.

In a filing with Bursa last Thursday, the glove manufacturer informed investors that it will be releasing its 1QFY22 results this Friday (Dec 10).

Meanwhile, in a research note on Monday, Hong Leong Investment Bank (HLIB) analyst Sophie Chua Siu Li said the headwinds for the world's largest glove manufacturer are unlikely to dissipate immediately, and maintained her "hold" call for Top Glove with an unchanged target price of RM2.80.

She believes that demand for gloves is expected to remain soft, while lower demand for nitrile gloves had resulted in the tapering off of raw material prices.

“Following the lifting of US Customs and Border Protection (CBP) bans, Top Glove resumed shipment of gloves to the US market at end-September.

“We understand that sales to the US are still recovering gradually, but have yet to reach pre-CBP ban levels as buyers redirected their purchases to other glove makers during the CBP ban,” she said.

Chua also noted that HLIB recently held a virtual meeting with Top Glove to discuss its proposed dual primary listing on the Stock Exchange of Hong Kong (HKEX) and obtain recent business updates.

“We are neutral on this exercise (the HKEX listing) as the positives from a larger war chest and larger pool of potential investors are balanced by the dilutive effect. The exercise is expected to be completed in the first quarter of next year,” the research house said.

On Oct 28, Top Glove announced that it had almost halved the amount it is seeking to raise from its listing in Hong Kong to RM2.21 billion from RM4.17 billion declared in April. This is the second time it has lowered the amount of funding it seeks to raise as in February, it sought to raise RM7.71 billion.

Top Glove's net profit for the fourth quarter ended Aug 31, 2021 (4QFY21) plunged 70.14% quarter-on-quarter to RM607.95 million, compared with RM2.04 billion for the immediate preceding quarter, and was down 48.37% year-on-year (y-o-y) from RM1.18 billion for 4QFY20.

Its revenue almost halved by RM2.12 billion for 4QFY21 from RM4.16 billion for 3QFY21, and declined 31.95% y-o-y from RM3.11 billion previously.

For FY21, its cumulative net profit surged a whopping 349.1% to RM7.87 billion from RM1.75 billion a year ago. Revenue more than doubled to RM16.41 billion, compared with RM7.24 billion previously.


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