Top Glove loses ground despite record RM1.29 billion quarterly net profit

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KUALA LUMPUR (Sept 17): Selling pressure mounted on Top Glove Corp Bhd's shares in the afternoon session, even after the glove manufacturer announced its record-high quarterly net profit of RM1.29 billion for the fourth financial quarter ended Aug 31, 2020 (4QFY20).

Top Glove's share price dropped below RM8 as at 4.35pm to RM7.95 with 183.9 million shares changing hands. This is a nearly 10% drop from its intraday high of RM8.82.

The fall in Top Glove, the second largest FBM KLCI component stock in terms of market capitalisation, has dragged down the benchmark index. The FBM KLCI index declined 18.7 points or 1.22% to 1,512.56 points.

At noon market break, the rubber glove giant announced that it posted its largest quarterly net profit on record today.

Quarterly profit of RM1.29 billion recorded for 4QFY20 is nearly 18 times higher compared with RM74.17 million posted in the corresponding quarter last year. Its quarterly revenue skyrocketed by 161% to RM3.11 billion, from RM1.19 billion in 4QFY19.

It is declaring a final dividend of 8.5 sen, bringing FY20 total dividend payout to 11.8 sen per share, representing a net profit payout ratio of 51% of annual profit.

Earnings per share (EPS) for 4QFY20 came in at 15.95 sen versus 0.97 sen a year ago, resulting in cumulative annual EPS of 23.31 sen for FY20 compared with 4.76 sen for FY19.

The strong fourth quarter performance lifted Top Glove’s annual net profit to RM1.87 billion — the highest ever achieved by the world’s largest glove manufacturer. This is a 412% jump from RM364.68 million in FY19. Annual revenue leaped 50.7% year-on-year to RM7.24 billion, from RM4.8 billion.

Top Glove attributed the stellar set of earnings to the surge in demand for rubber gloves following the Covid-19 pandemic, as well as productivity enhancements that made it more efficient and reach superior economies of scale.

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Kathy Fong