- Top Glove’s 1QFY23 results – net loss of RM168mil (+2.2x q-o-q; RM186mil net profit in 1QFY22) were below our/consensus estimates.
- Near-term outlook remains challenging due to low utilisation rate of 30% (on effective capacity) no thanks to on-going inventory depletion activities at the customers’ end and stiff competition especially from the China counterparts.
- - Read this at SGinvestors.io -
Hit by low plant utilisation rate
- Including RM11mil inventory write down on unsold goods, Top Glove (SGX:BVA) reported a RM168mil net loss in 1QFY23 versus MIBG/consensus FY23E net profit of RM179mil/184mil.
- - Read this at SGinvestors.io -
Key takeaways from concall with Top Glove's management
- Top Glove is unable to raise its selling price due to the stiff competition amid an oversupply environment. To recap, it had intended to raise its ASP by +5% and to resume its pre-pandemic’s widely-used cost-plus pricing in Sep 2022,
- Top Glove will prioritise cash flow over profitability for now. It has lowered its ASP (to below US$20/kpcs) to secure sales and raise plant utilisation rate,
- ASP is stablising or declining at a slower pace in recent months,
- Top Glove will focus on strengthening/optimising its cost structure and temporarily shut down old/inefficient factories, and
- it does not discount the possibility to distribute its treasury shares as stock dividend.
Top Glove – Earnings adjustments
- Read more at SGinvestors.io.
