Top Glove - RHB Invest 2024-10-07: 4QFY24 Results Preview; Maintain BUY

• Top Glove (SGX:BVA) is scheduled to report its 4QFY24F results on 10 Oct. We expect its core loss to narrow q-o-q to MYR2-5m (vs 3QFY24 core loss: MYR53.5m), on a recovery in sales volume, offset against by q-o-q flattish ASP and a weaker US$/MYR.
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Results preview.

• We expect Top Glove to deliver a core loss of MYR2-5m from a core loss of MYR53.5m in 3QFY24 on the back of:
  1. Improving operating efficiency (expecting a higher plant utilisation rate) with sales volume expected to grow by 20%;
  2. - Read this at SGinvestors.io -
• In terms of cost, global natural gas commodity prices spiked 19% q-o-q, offset against by the easing of raw material prices (i.e. natural latex: -2%; acrylonitrile: -5%).

Outlook.

• Industry operating dynamics remain in favour of local gloves manufacturers as customers are more receptive to the price hike. That said, industry blended ASP is set to improve further to US$21-22/1,000 pieces (pcs) by 4QCY24 as MY glove makers are in the discussion stage to raise prices to translate the effect of the weakening US$ to customers. China glove makers’ ASPs now at US$18-19 per 1,000 pcs from US$17-18 in the previous quarter.
• In terms of demand, Malaysia’s gloves export volume surged 66% m-o-m and 105% y-o-y in Aug, outpacing the growth in July (+12% m-o-m; +43% y-o-y). The latest export volume is even 34% higher compare to pre-pandemic 2-years monthly average number indicating that the recovery momentum of global gloves demand remains healthy.

Earnings revision & valuation.

• Read more at SGinvestors.io.

Oong Chun Sung RHB Securities Research | https://www.rhbgroup.com/ 2024-10-07 SGinvestors.io

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