TOPGLOV 7113 TOP GLOVE CORPORATION BHD to rebound in the long term, says Valuevest Ventures

 TOPGLOV 7113 TOP GLOVE CORPORATION BHD to rebound in the long term, says Valuevest Ventures

Valuevest Ventures noted that the gloves' average selling price (ASP) was declining at a far slower pace, which would assist in cushioning the cost impact moving forward.

KUALA LUMPUR: Top Glove Corporation Bhd is expected to rebound in the long term as it has paid out a total dividend of RM7.84 billion since 2001, which reflects the company's dedication to sharing its profit with shareholders.

Valuevest Ventures noted that the gloves' average selling price (ASP) was declining at a far slower pace, which would assist in cushioning the cost impact moving forward.

"Meanwhile, sales to the United States from Malaysia continued to trend higher in the third quarter (Q3) ended May 31, 2022 (FY22), increasing by eight per cent compared with Q2 FY22, with great potential for further growth, which bodes well for the group," it said in a report.

The firm said its initial plan was to double its annual manufacturing capacity from 100 billion pieces of gloves in 2021 to 201 billion in 2025.

Top Glove has decided to reduce its capacity expansion programme by approximately 22 per cent, or 45 billion pieces of gloves, to 156 billion from 201 billion previously to prevent an oversupply in the rubber glove industry.

"Although the ASPs may experience some adjustments, we believe it will be more stable in the future," it said.

It stated that the overall group revenue had shown a downward pressure from RM16.36 billion in 2021 to RM4.5 billion in its nine-month FY22.

Despite the lower revenue, the average revenue and profit after tax margin were in the same range as before the pandemic outbreak. In addition, the firm noted that the company had maintained the PAT margin.

"With the recent share performance of the group, the share price had shown a downtrend after the pandemic outbreak as the demand for gloves had decreased.

"However, in the long term, we believe that Top Glove will shine again as it has paid out a total dividend of RM7.84 billion since 2001, which means the company is serious and dedicated to sharing its profit with shareholders," it added.

The firm initiated coverage on Top Glove with a 'Buy' call and a target price of RM1.58.

https://www.nst.com.my/business/2022/09/829963/top-glove-rebound-long-term-says-valuevest-ventures