KUALA LUMPUR (Oct 6): CIMB Investment Bank Bhd said Top Glove Corp Bhd's fourth quarter net profit could have fallen up to 37% from a year earlier, on higher fuel and labour cost, amid a more competitive operating environment.

In a note today, CIMB analyst Walter Aw said rubber glove manuufacturer Top Glove could have posted a net profit of between RM65 million and RM70 million in the fourth quarter ended Aug 31, 2016 (4QFY16).

"Top Glove will release its 4QFY16 results on 12 Oct 16. We think that 4QFY16’s net profit will come in flattish qoq (quarter-on-quarter), in the region of RM65m-70m (-32% to -37% yoy (year-on-year). This would bring total FY16 net profit to RM360m-365m, falling short of our RM375m estimate.

"While ASPs may have started stabilising in 4QFY16, a substantial recovery in ASPs is unlikely to take place in the near term. Pricing competition continues to be intense, as glove makers, including Top Glove, are still focused on growing market share at the expense of margins," Aw said.

In FY15, Top Glove's 4QFY15 net profit rose to RM103.12 million, from RM46.32 million a year earlier. Full-year net profit was higher at RM280.15 million versus RM180.52 million.

In a statement issued in conjunction with the announcement of Top Glove's 3QFY16 results, executive chairman Tan Sri Dr Lim Wee Chai said: “We should do better in the next quarter (4QFY16), with a more stable ringgit and raw material prices.

“However, we prefer not to depend on external factors, but rather focus on internal factors which are within our control. This has enabled us to achieve volume growth, even in such challenging times.”

Today, Aw said CIMB maintained its Top Glove share target price at RM4.05, with an unchanged "reduce" call. At 11:55 a.m., Top Glove shares fell 18 sen or 4% to RM4.93, for a market value of RM6.4 billion.

Top Glove was Bursa Malaysia's second-largest decliner.