KUALA LUMPUR: Shares in Top Glove Corp Bhd
rose in early trade Thursday after its latest quarterly results came in within expectations
The world's largest glove maker rose 1.66%, or 1.5 sen to 92 sen with 22.78 million shares traded. Year-to-date, it has risen about 5%.
Top Glove posted a smaller net loss of RM57.7mil for the first quarter ended Nov 30, 2023 (1Q24) compared with a net loss of RM168.2mil in the same period last year.
Revenue for the quarter fell to RM493.4mil from RM632.5mil a year prior.
MIDF Research said Top Glove results came in line with its expectations.
“We deem 1Q24 results in line with our expectation despite our core net profit projection of RM72.9mil for FY24 as we anticipate Top Glove to report narrower losses in 2Q24 and subsequently return to the black in 2HFY24.
“Meanwhile, 1Q24 earnings were slightly ahead of the consensus FY24 projection of -RM53.4mil. No dividend was declared for the quarter,” it said.
The research house noted that in 1Q24, Top Glove’s sales volume increased +9% quarter-on-quarter (QoQ), primarily attributed to the depletion of customer pandemic inventories and the resumption of replenishing activities.
The sales volume contribution from the Asia region increased from 20% pre-pandemic level to 32% of total sales volume in 1Q24.
“We gather that the surge in sales volume during 1QFY24 is not linked to the recent rise in COVID-19 cases, as the cases are currently less severe, with the majority exhibiting mild symptoms.
“Besides, Chinese glovemakers currently have an almost 3-months order backlog, leading to a shift in demand towards Malaysian glovemakers.
“This suggests that the group is well-positioned to capture the flow of customer replenishment orders, thereby we continue to expect a better utilisation rate in FY24,” MIDF said.
The research house has maintained a “neutral” call on Top Glove with a higher target price of 84 sen from 70 sen previously.
Meanwhile, Hong Leong Investment Bank Research said Top Glove’s results were above its expectations but were below consensus full-year estimates.
It said the narrower losses registered QoQ was aided by an uptick in sales volume, as well as its cost optimisation efforts, which have helped to neutralise the higher raw material costs.
“We raise our FY24f/25f forecasts to -RM101.5m/RM190. 4mil (from -RM223.9m/-RM162.9m) as we impute better margin assumptions to reflect cost efficiency arising from improved utilisation rates. We also introduce our FY26f forecasts of RM305.3mil,” it said.
The research house has upgraded the stock to “hold” from “sell” previously with a higher target price of RM1 from 51 sen.
