10 Quick Things That Investors Should Know About Top Glove Latest Earnings Update
Yesterday, Top Glove (SGX: BVA) announced its fourth quarter and full year earnings update for its fiscal year ended 31 August 2018 (FY2018).
As a quick introduction, Top Glove is the largest rubber gloves maker in the world with a market share of aroud 25%. The company, which has a primary listing on Malaysia’s stock market, was dual-listed here in Singapore in June 2016.
Here are 10 things that investors should know from Top Glove’s latest earnings update:
1. Revenue for the reporting quarter jumped by 34.8% year-on-year to RM 1.22 billion.
2. Operating profit for the quarter was up 58.8% to RM 161.0 million.
3. The operating profit margin for the latest quarter was 13.2%, up from 11.2% in the same period last year, mainly due to lower raw material costs and improvements in operational efficiency.
4. Net profit attributable to shareholders for the reporting quarter was RM 101.6 million, 7.5% higher from a year ago.
5. Earnings per share for the quarter was consequently up by 5.4% to 7.95 sen.
6. For the whole of FY2018, Top Glove generated operating cash flow of RM 344.1 million, down 10% from RM 381.1 million a year ago.
7. As of 31 August 2018, Top Glove’s borrowings stood at RM 2.21 billion while its cash and bank balances stood at RM 164.2 million, giving it a net debt position of RM 2.05 billion.
8. Top Glove has received shareholders’ approval to undertake a bonus issue of 1.280 billion new ordinary shares of itself, on the basis of 1 bonus share for every existing Top Glove share.
9. The company declared a final dividend of RM 0.10 per share for the reporting quarter. This would bring the total dividend for FY2018 to RM 0.17 per share, an increase of 17% over FY2017’s total dividend of RM 0.145 per share. FY2018’s dividend also represents a net profit payout ratio of 50%.
10. Here’s the outlook statement shared by Top Glove in its earnings update:
“To ensure it is well-positioned to meet the robust global demand for gloves and achieve its ambitious Fortune Global 500 dream, Top Glove will continue to pursue strategic expansion. In progress is the expansion of several existing facilities: F32 (Phases 1 & 2 to be completed early and end 2019 respectively), F33 (to be completed early 2019) and F5A (to be completed end 2019).
Meanwhile, its newest factory F8A in Thailand, is scheduled to be operational early 2020. These will boost the Group’s total number of production lines by an additional 98 lines and production capacity by 9.8 billion gloves per annum. By 2020, Top Glove is projected to have 746 production lines and a production capacity of 69.1 billion gloves per annum. Top Glove is also looking to expand its operations to Vietnam and has entered into an agreement to acquire a piece of land for a factory which is expected to commence operations within the next 2 years.
In support of its ambitious growth agenda, Top Glove will also continue to explore inorganic expansion via mergers and acquisitions, as well as new set-ups in related industries in order to grow faster and more efficiently…
…Notwithstanding its outstanding performance, Top Glove is mindful of potential challenges ahead which include cost increases and intensifying competition. However, it remains highly optimistic of prospects moving forward, given the steady global glove demand which is set to grow at about 10% yearly.”