KUALA LUMPUR (March 23): Top Glove Corp Bhd shares dropped by 1.94% to close at RM5.05, after trading in negative territory for most of today, which is the ex-date of the company’s dividend payment.
The counter fell by as much as 2.14% to its intraday low of RM5.04, before paring some losses. At RM5.05, it has a market capitalisation of RM41.43 billion, with 20.46 million shares traded.
The stock opened one sen or 0.19% higher at RM5.16 against yesterday’s adjusted closing price of RM5.15. Subsequently, the stock reversed its fortunes today, sliding to an intra-morning low of RM5.08 before paring losses at RM5.13 at 12pm.
At RM5.13 apiece, the world's largest rubber glove manufacturer had a market capitalisation of RM42.09 billion. At that time, 9.6 million shares had been traded.
The decline in Top Glove’s share price was not unexpected.
Yesterday, Malacca Securities head of research Loui Low anticipated Top Glove shares to fall on its ex-date today for dividend payment.
“For those who bought the shares before the ex-dividend date, they will get the dividend, while if it is purchased on the ex-date or after, they will not get the dividend,” said Low.
In conjunction with the release of its results for the second quarter ended Feb 28, 2021 (2QFY21), the group on March 9 declared a second interim dividend payment of 25.2 sen per share, payable on April 6. The ex-date of the dividend is March 23 (today), while the entitlement date falls on March 24 (tomorrow).
This brings total dividends declared by Top Glove for the first half ended Feb 28, 2021 (1HFY21) to 41.7 sen per share, representing a 253% increase from full-year dividends for FY20 of 11.8 sen per share.
To recap, Top Glove’s net profit for 2QFY21 rose 20.76% quarter-on-quarter (q-o-q) to RM2.87 billion from RM2.38 billion. Revenue grew by 12.74% to a record RM5.37 billion from RM4.76 billion for 1QFY21.
For 1HFY21, net profit surged 22 times to RM5.23 billion from RM227.11 million a year ago, while cumulative revenue jumped three times to RM10.12 billion from RM2.44 billion.
It is worth noting that its executive chairman Tan Sri Dr Lim Wee Chai on March 19 bought another 1.74 million shares of the group at RM5.27 a share, raising his shareholding in the glove maker to 2.13 billion shares or 26.59%.
Lim also has an indirect stake of 692.19 million shares or 8.651% of the group, according to Top Glove in a stock exchange filing.
Prior to this, he purchased two separate lots of shares of 3.83 million shares and 569,600 shares on March 15 and 16 respectively at about RM5.20 each.
Based on a back-of-the-envelope calculation, Lim will earn about RM710.56 million from the group’s latest dividend payment of 25.2 sen per share based on his total shareholdings.
Combined with the dividend payment of 16.5 sen per share for 1QFY21, he is expected to receive a lucrative total dividend payment of RM1.17 billion.
Meanwhile, Hong Leong Investment Bank (HLIB) Research maintained its “buy” rating of Top Glove, with an unchanged target price (TP) of RM8.14, as it expects the group to post stronger q-o-q results for 3QFY21.
In a note yesterday, HLIB Research said the world’s largest glove manufacturer’s near-term outlook remains positive following its recent meeting with the company’s management.
The research house anticipates a stronger set of results despite an expected decline in average selling prices (ASPs) of nitrile gloves and powder-free natural rubber gloves by 3% to 5% in April and May from levels seen in February and March.