Top Glove reported a fifth consecutive quarter of core net losses, albeit narrowed. This is after adjusting for a one-off impairment of RM389m related to the decommissioning of its production lines.
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Positively, some light was shed from margin expansion following moderating input costs and favourable forex, besides leaner opex after recent capacity rationalisation exercises.
Maintain HOLD on Top Glove with a lower target price of RM0.82.
4QFY23 results within expectations.
Top Glove (SGX:BVA) reported a narrowing 4QFY23 core net loss of RM74.6m (-30.8% q-o-q, +41.9% y-o-y), despite revenue declining significantly to RM476m (-10.3% q-o-q). This is after stripping off a one-off impairment of RM389m relating to decommissioning of its production lines.
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Operating statistics reflect industry-wide slowdown; ASP and volume sales contracted q-o-q.
4QFY23 volume sales softened ~9.5% q-o-q, mainly due to overall softer demand. Meanwhile, ASP contracted marginally to ~US$21 per 1000 pcs (-0.5% q-o-q) in tandem with cost pass-through from lower raw material prices.
Utilisation rate for the quarter remains sluggish at ~31% based on current effective capacity of ~60b pieces annually.
Given depressed industry utilisation rates, stiff price competition continues to linger and orders remain smaller due to short delivery times.
Bottom line losses continue to narrow; likely to break even in upcoming quarter.
Read more at SGinvestors.io.
Above is an excerpt from a report by UOB Kay Hian Research. Clients of UOB Kay Hian may be the first to access the full PDF report @ https://www.utrade.com.sg/.
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