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.
Above is an excerpt from a report by Maybank Research. Clients of Maybank Securities may be the first to access the full PDF report @ https://www.maybanktrade.com.sg/.
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