in

Top Glove slides to RM8 despite strong earnings, dividend

KUALA LUMPUR: Shares of Top Glove Bhd came under selling pressure late Thursday, falling to a low of RM8 despite its strong set of earnings, firm outlook and dividend as investors took profit.

At 4pm, it was trading at RM8.08, down 35 sen with over 161 million shares traded at prices ranging from RM8 to RM8.82.

The FBM KLCI fell 21.29 points or 1.38% to 1,510.09. Turnover was 6.18 billion shares valued at RM5.03bil. The broader market was weaker with 797 losers to 339 gainers and 352 counters unchanged.

The world’s top glove maker posted its highest-ever net profit of RM1.29bil in 4Q Aug. 31, compared with RM74.2mil a year ago, surpassing the RM349.2mil, according to analyst estimate from a poll by Refinitiv.

In its statement issued at the midday break, Top Glove said: “With more upside in glove demand expected, the group also looks forward to fresh highs in FY2021.”

Its net profit in 4Q surged by a phenomenal 1,642% in to RM1.29bil from RM74.16mil a year ago. The sizzling performance drove its FY20 net profit 412% higher to RM1.86bil from RM364.67mil a year ago.

Revenue increased by 161% to RM3.11bil from RM1.18bil a year ago. Again, this help boost its FY20 revenue, which increased also by a 50.7% to RM7.23bil from RM4.80bil in FY19.

The board recommended a final dividend of 8.5 sen per share, amounting to a payout of RM691.8mil.

In its press release, Top Glove said the healthy cash flow generated by the excellent performance enabled the group to lower borrowings, which led to a 33% savings in terms of interest cost.

Over the course of FY2020, the net cash flow generated from operating activities was RM3.17bil compared with RM530mil in FY2019, an impressive increase of 500%.

This has considerably strengthened the group’s financial position, which enabled the group to fully settle its syndicated loan of RM654mil during the year.

In addition, a total of RM710mil or 87.2% of its exchangeable bonds were converted into ordinary shares of the company.

“As at Aug 31,2020, the group was in a net cash position of RM2.34bil, in turn allowing the funding of ongoing organic capital expenditure, dividend payment, future M&As as well as the acquisition of land bank for business expansion, ” Top Glove said.

Reference