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Analysts Expect Top Glove to Post Lowest Quarterly Net Profit Since 2004
Analysts expect Top Glove to post lowest quarterly net profit since 2004
KUALA LUMPUR: Consensus estimate among analysts is that Top Glove Corp Bhd will see its net profit for the year ended Aug 31, 2022 (FY22) plunge to RM300.65 million from the RM7.87 billion reported for FY21.
Revenue, meanwhile, is expected to decline to RM6.1 billion from RM16.4 billion in FY21, according to the consensus projection based on Bloomberg data.
Top Glove, the world' s largest rubber glove manufacturer in terms of production capacity, will release its fourth quarter (4QFY21) and full-year (FY22) results on Sept 20.
Based on the RM300.65 million net profit estimate for FY22, Top Glove' s net profit for 4QFY22 would be around RM12 million, the lowest quarterly earnings since 4QFY04 when the group posted RM11.76 million.
For 3QFY22, Top Glove saw its net profit fall to RM15.29 million from RM2.04 billion a year earlier, while revenue dropped to RM1.46 billion from RM4.16 billion.
For the first nine months of FY22, the group reported a net profit of RM288.56 million and revenue of RM4.5 billion.
According to Bloomberg data, three out of 12 analysts have forecast that Top Glove would earn a net profit of below RM275 million for FY22, which indicates that the group may have suffered a loss in 4QFY22. These analysts are from from Hong Leong Investment Bank Bhd, Public Investment Bank Bhd and KAF Equities Sdn Bhd.
Another three analysts - from Affin Hwang Investment Bank Bhd, TA Securities Holdings Bhd and UOB Kay Hian Research - have projected Top Glove' s net profit for FY22 at between RM298 million and RM299 million, which would give a net profit of below RM12 million for 4QFY22.
Four more analysts - from Kenanga Investment Bank Bhd, AmInvestment Bank Bhd, CGS-CIMB Securities Sdn Bhd and Maybank Investment Bank Bhd - have forecast full-year net profit in the range of RM304 million to RM307 million, meaning that that the 3QFY22 net profit would be about RM15 million.
Meanwhile, two other analysts - from BIMB Securities Sdn Bhd and MIDF Amanah Investment Bank Bhd - estimated that the group would secure a net profit of above RM330 million for FY22.
Top Glove' s rival, Hartalega Holdings Bhd, had reported a net loss of RM197.9 million for its fourth quarter ended March 31, 2022 but managed to return to the black in the first quarter ended June 30, 2022 with a net profit of RM88.28 million.
Smaller cap glove companies Careplus Group Bhd and Comfort Gloves Bhd have also reported losses as the world transitions into Covid-19 endemicity.
Careplus has sunk into the red since its fourth quarter ended Dec 31, 2021. Comfort Gloves had a rebound for its second quarter ended June 30, 2022 after it went into a loss for its first quarter ended March 31, 2022.
In its investor presentation uploaded on its website on Monday, Top Glove highlighted that nitrile glove sales volume continued to show an increasing trend driven by sales to the US, Western Europe, Asia and Latin America.
In a chart, the group said nitrile gloves made up 40% of product mix by volume in 3QFY22, a growth from the 37% and 34% in 2QFY22 and 1QFY22 respectively. Overall in FY20 during the pandemic, it was at 47%.
Top Glove added that there are strong growth opportunities in developing countries on the back of large populations but with current low glove usage such as Indonesia, India and China.