Top Glove falls 4% in active trade on dismal 4Q earnings

Top Glove falls 4% in active trade on dismal 4Q earnings
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KUALA LUMPUR (Sept 21): Shares in Top Glove Corp Bhd fell more than 4% in active trade early on Wednesday (Sept 21), after the glove maker closed the final quarter of the financial year ended Aug 31, 2022 (FY22) in the red, as escalating costs as well as normalisation of demand and average selling prices for gloves ate into its earnings.

At 9.30am, Top Glove was down 3.55% or 2.5 sen to 68 sen, with 33.20 million shares traded. The stock had earlier fallen to 67 sen.

Top Glove share price fell 8.5% to 65 sen at the close on Wednesday, from the previous close of 70 sen, at a market capitalisation of RM5.26 billion.

For the fourth quarter (4QFY22), Top Glove posted a net loss of RM52.59 million, compared to a net profit of RM447.4 million for 4QFY21, as revenue fell 52.28% to RM990.1 million from RM2.07 billion.

The 4QFY22 net loss caused its cumulative net profit for FY22 to plummet 96.94% to just RM235.97 million, from RM7.71 billion for FY21. Full-year revenue fell 65.94% to RM5.57 billion from RM16.36 billion.

Meanwhile, Hong Leong Investment Bank Research maintained its "sell” rating of Top Glove at 70.5 sen, with a lower target price (TP) of 54 sen (from 83 sen), and said its 4QFY22 core loss after tax and minority interests of RM80.7 million (3QFY22: RM8.6 million; 4QFY21: RM447.4 million) brought its full-year FY22 core profit after tax and minority interests to RM175.2 million (-98% year-on-year).

In a note on Wednesday, the research house said the results came in below its estimate at 63% and the consensus at 58%.

“The negative deviation from our forecast was mainly due to higher-than-expected cost of sales.

“We cut our earnings forecasts for FY23-24 by 18%-52%, as we lower our utilisation rate assumptions to 55%-75%.

“Our valuation base year is also rolled over to calendar year 2023 (CY23).

“Our TP is lowered to 54 sen (from 83 sen), representing a price-earnings multiple of 17.3 times (at a mean to its five-year pre-pandemic average) on CY23 earnings per share of 3.1 sen. We maintain 'sell',” it said.

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Top Glove closes final quarter of FY22 in the red with net loss of RM53m