- Downgrade to SELL from Buy, with DCF-derived Top Glove's target price of MYR1.10 (down from MYR1.28), 17% downside from the current Top Glove's share price.
- - Read this at SGinvestors.io -
Results overview.
- Top Glove (SGX:BVA)’s 1QFY25 core loss of MYR21.9m was wider than our and Street expectations due to the mismatch between cost and ASP.
- Realized ASP fell 2% q-o-q to US$19.3 whereas sales volume spiked by 16% q-o-q (+104% y-o-y) to 10.4bn pieces mainly driven by strong growth in the US.
- - Read this at SGinvestors.io -
- Plant utilisation rate improved 7ppts q-o-q to 66% which resulted in the core loss narrowing.
Key takeaways from results briefings.
- Top Glove undertook a price adjustment towards the latter part of 1QFY25 as it will begin passing on the effect of the weakening US$ to customers. The effect of ASP increase (US$1-2), particularly in the US market, will be more pronounced in 2QFY25 due to the time lag effect.
- The pricing structure of the 5-year senior sukukwakalahwill be concluded by Jan 2025. Correspondingly, the group will utilise MYR800m (out of MYR3bn of the sukuk) together with MYR380m internal cash to fund the redemption of the perpetual sukuk(which is set to expire by Feb 2025).
Outlook.
- Read more at SGinvestors.io.
