KUALA LUMPUR (Dec 6): Shares in Top Glove Corp Bhd sank as much as 25 sen or 8.9% to RM2.56 on Monday (Dec 6) ahead of the release of its latest quarterly results on Friday.
The counter opened four sen lower at RM2.77 and continued to drift lower towards the noon break before recovering. However, it dropped again towards the final bell to close down 24 sen or 8.54% to RM2.57, giving the group a market capitalisation of RM21.09 billion.
Some 35.06 million shares changed hands on Monday.
In a filing with Bursa Malaysia last Thursday, the world's top glove manufacturer informed investors that it would be releasing its results for its first quarter ended Nov 30, 2021 (1QFY22) on Friday.
In a research note on Monday, Hong Leong Investment Bank (HLIB) analyst Sophie Chua Siu Li said the headwinds for Top Glove are unlikely to dissipate immediately, and maintained her "hold" call for the company with an unchanged target price of RM2.80.
She believes that demand for gloves is expected to remain soft, while lower demand for nitrile gloves has resulted in the tapering off of raw material prices.
"Following the lifting of US Customs and Border Protection (CBP) ban, Top Glove resumed shipment of gloves to the US market at end-September.
"We understand that sales to the US are still recovering gradually, but have yet to reach pre-CBP ban levels as buyers redirected their purchases to other glove makers during the CBP ban," she said.
Chua also noted that HLIB recently held a virtual meeting with Top Glove to discuss its proposed dual primary listing on the Stock Exchange of Hong Kong and obtain recent business updates.
"We are neutral on this exercise as the positives from a larger war chest and larger pool of potential investors are balanced by the dilutive effect. The exercise is expected to be completed in the first quarter of next year," the research house said.
On Oct 28, Top Glove announced that it had almost halved the amount it was seeking to raise from its listing in Hong Kong to RM2.21 billion from RM4.17 billion declared in April. This was the second time it lowered the amount of funding it sought to raise, as in February it sought to raise RM7.71 billion.
Top Glove's net profit for 4QFY21 plunged 70.14% to RM607.95 million, compared with RM2.04 billion for the immediate preceding quarter, and was down 48.37% year-on-year from RM1.18 billion for 4QFY20.
Its revenue almost halved to RM2.12 billion from RM4.16 billion in 3QFY21, and declined 31.95% from RM3.11 billion in 4QFY20.
Full-year net profit for FY21 surged 349.1% to RM7.87 billion from RM1.75 billion in FY20. Revenue more than doubled to RM16.41 billion, from RM7.24 billion previously.