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Top Glove Last:0.26

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Top Glove Make or Break

the worst is yet 2 come.....

Joelton ( Date: 21-Sep-2022 10:04) Posted:

Top Glove posts first quarterly loss of S$16.3 mil since listing, raises glove prices amid challenges

GLOVE manufacturer Top Glove Corporation : BVA -2.27% posted its first quarterly net loss since the company&rsquo s Malaysia listing in 2001 amid mounting cost pressures and a pullback in demand.

On Tuesday (Sep 20), Top Glove reported a net loss of RM52.6 million (S$16.3 million) for the fourth fiscal quarter ended August, reversing from a net profit of RM447.4 million in the corresponding year-ago period.

Revenue for the quarter was down 52.3 per cent year on year to RM990.1 million from RM2.1 billion. The board did not propose a dividend for the period under review.

In a call on Tuesday to discuss the company&rsquo s financial results, Top Glove executives said the glove industry is now facing several headwinds. The company also said it will defer its new expansion plans to align with glove demand and supply.

On the supply side, there is currently an oversupply in the glove industry due to the &ldquo aggressive expansion&rdquo from existing players over the past 2 to 3 years. New entrants to the industry have also contributed to the oversupply, said managing director Lim Cheong Guan.

There has also been a correction in demand for gloves, due to excess stockpiling by customers. Some customers have also adopted a &ldquo wait and see&rdquo approach in anticipation of a further decline in average selling prices (ASPs), he said.

Lim was quick to stress that the declines in topline and bottomline figures are part of the &ldquo nature of the (glove sector&rsquo s) business&rdquo . Top Glove has anticipated this, and is working on several cost conservation and resource optimisation levels.

Glove ASPs have already fallen off their pandemic highs, and the drop in prices has forced Top Glove to write down its inventory value to net realisable value by RM56 million in Q4 2022 and by RM229 million for FY2022.

Among the company&rsquo s 4 types of gloves, surgical gloves was the only type which saw an increase in ASPs for Q4 on a quarter-on-quarter basis. Demand for this glove type held steady and rose after the Covid-19 pandemic due to the resumption of elective surgeries.

Meanwhile, ASPs for nitrile gloves and natural rubber gloves fell by 10 per cent and 6 per cent respectively over the same period, while prices of vinyl gloves were down by 5 per cent. The sales volume of all 4 glove types fell on a quarter-on-quarter basis.

Costs have also risen, further crimping margins for the company. Domestically, Top Glove was affected by an estimated 60 per cent hike in natural gas tariff over the course of FY2022, and a 25 per cent increase in the Malaysian minimum wage from RM1,200 to RM1,500 which took effect in May 2022.

The fall in ASPs and spike in costs mean glovemakers like Top Glove &ldquo can&rsquo t continue to lose money&rdquo , said executive chairman Lim Wee Chai. In October, Top Glove hiked its selling price by 5 per cent.

&ldquo We need an initiator to start raising prices,&rdquo he added, noting that other players might follow suit and increase prices as well. He added that the company did face &ldquo some resistance&rdquo from its customers after the price increase.

For now, Top Glove does not have plans to raise funds from markets, said managing director Lim. He noted that the group also has banking facilities that it &ldquo can draw on if there is a need&rdquo .

A company spokesperson told The Business Times that the company&rsquo s upward price revision, declining raw material prices and a stronger US dollar will help the group return to profitability.

&ldquo ASPs are bottoming out, and there should be no need for further writedowns if the price continues to stabilise. Hence, we should see an improvement next quarter,&rdquo the spokesperson added.

The key issue is demand and supply and that equilibrium is no longer in place given the abundance of supply from the Chinese who' d ramped up manufacturing capabilities significantly during the pandemic. Many variables at play, FX and operating costs for sure. Not quite sure what' s the level of customer cohesion TG has with their customers but presumably price competition will be intense.

TG is doing badly last qtr but from the news, seems like the worse may be over. Not vested.

In October, Top Glove hiked its selling price by 5 per cent. We need an initiator to start raising prices, he added, noting that other players might follow suit and increase prices as well. He added that the company did face some resistance from its customers after the price increase.

For now, Top Glove does not have plan to raise funds from markets, said managing director Lim. He noted that the group also has banking facilities that it can draw on if there is a need .

A company spokesperson told The Business Times that the company upward price revision, declining raw material prices and a stronger US dollar will help the group return to profitability. ASPs are bottoming out, and there should be no need for further writedowns if the price continues to stabilise. Hence, we should see an improvement next quarter the spokesperson added.

The pandemic spurs the Chinese companies to compete on the area of gloves sector. This result in massive oversupply. And you know China companies are king in squeezing margin that they can bleed u death. This situation results in situation worst than pre pandemic. Top gloves future look bleak. Those who think TP will make a come back on 2-3 years time may be disappointed. Better write off this stock losses and move.on others. My advise, don't average down.

ProRobot ( Date: 21-Sep-2022 11:10) Posted:

Don&rsquo t be con by the Top Glove Chairman losses billion of dollar in market capitalization.
Does he sound worry and working hard to defend Top Glove Revenue, Profit and market shares.
How can the company perform much worse than Covid Pre Pandemic?

The Chairman make USD$400m in dividend in Year21.
In Jan22 when the market price is SGD$0.77c, the market capitalization is round USD$1,6billion.
Now in Sept22,the stock price has plunge to SGD$0.20 making the market capitalization of USD$400m
What he has been short selling the stocks during the peak, he will make tons of money.
Better than selling glove in the market.
With the profit he gain, he can buy up the whole Top Glove.
Somemore sitting there with big salary and package, who cares about top glove shares.

The market has plenty of sharks lurking around. Just beware of them.

really breaking down wonder what is good price to pick?
any idea when is the AGM?

Shorties mkt, watoexp.

watashievil ( Date: 21-Sep-2022 10:02) Posted:

like repeat of scm~ but this better la at least not in heavy debts.
but really ugly sia no rebound at all keep sliding~