Top Glove - UOB Kay Hian 2024-03-21: A Setback In 2QFY24 With Silver Linings

Top Glove - A Setback In 2QFY24 With Silver Linings In 2QFY24

Top Glove (SGX:BVA) | SGinvestors.ioTop Glove (SGX:BVA)
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  • Top Glove's core losses widened in 2QFY24, reflecting a time lag of ASP adjustment to counter surging input costs. This offset volume growth (+18% q-o-q).
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2QFY24 earnings missed expectations.

  • Top Glove (SGX:BVA)’s 2QFY24 core net loss widened to RM77.8m (34.4% q-o-q, -52.7% y-o-y), despite higher revenue of RM550.3m (+11.5% q-o-q). The deviation between revenue growth and widening core losses mainly reflects margin compression due to ASP-cost mismatch in the quarter.
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Volume sales expanded q-o-q, but margin compressed on higher input costs.

  • 2QFY24 volume sales strengthened by18% q-o-q, reflecting better demand as customers ramped up inventory replenishment. Meanwhile, ASP contracted 5% q-o-q to around US$17/’000 pcs.
  • Management alluded that input costs, such as nitrile and latex prices, surged 3% and 15% q-o-q respectively, but there was a 1-2 months’ time lag in terms of ASP adjustment. As such, Top Glove absorbed the higher input cost in 2QFY24, causing margin to contract q-o-q.
  • Positively, utilisation rate for the quarter saw a better improvement to ~39% based on its current effective capacity of 60b pieces annually (1QFY24: ~33%).

Operating matrixes sustaining recovery momentum.

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Above is the excerpt from report by UOB Kay Hian Research.
Clients of UOB Kay Hian may be the first to access the full report in PDF @

Jack Goh UOB Kay Hian Research | 2024-03-21

Previous report by UOB:
2024-01-12 Malaysia Gloves Maker - Overhyped Market Expectations Pose Short-term Downside Risk.

Price targets by 3 other brokers at Top Glove Target Prices.

Listing of research reports at Top Glove Analyst Reports.

Relevant links:
Top Glove Share Price History,
Top Glove Announcements,
Top Glove Dividends & Corporate Actions,
Top Glove News Articles


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