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Top Glove shares in ascend despite lower sales amid US ban

Despite a softer quarter, the medical glove manufacturer remains optimistic about its future, implementing new best environmental and employee practices in its latest outlook.

  • Top Glove Corporation Bhd. (SGX: BVA) share price rose nearly 4% after the release of its March-May 2021 quarter
  • Sales revenue soared 147% for the quarter from the same period a year ago
  • However, on a quarterly basis, sales revenue eased 22% on the back of lower average selling prices
  • The group’s board has proposed a quarterly dividend amount of 18 sen per share
  • It is also positive that the US ban, which is ‘only temporary’, will not impact its planned Hong Kong listing
  • Buy and sell Top Glove shares with an IG account

Top Glove share price: What’s the latest?

Top Glove Corporation’s Singapore-listed shares rose as much as 3.8% on Wednesday (09 June 2021), after it reported its financial results for the third quarter of FY2021.

The world’s largest maker of medical gloves saw sales revenue burgeon 147% year-on-year to 4.16 billion ringgit in 3Q FY2021.

Meanwhile, profit after tax came in at 2.06 billion ringgit, 490% higher than the third quarter of FY2020.

On a quarter-on-quarter basis, sales revenue and profit after tax eased 22% and 29% respectively.

The group said the softer performance came on the back of adjustments to average selling prices (ASPs) which had peaked in February 2021, in line with global glove market pricing trends.

A ban on shipments to the US from Malaysia over concerns of forced labour by the company also led to a 68% fall in sales to North America from the previous quarter, and an overall sales volume decline of 4% from the previous quarter.

Top Glove proposes dividend payout ratio of 71%

Top Glove’s board of directors has proposed a dividend amount of 18 sen per share for the third quarter, which represents a payout ratio of 71% - comprising a special dividend payout of 21% plus 50%.

The ex date for the dividend is 23 June 2021, while the payment date is 07 July 2021.

The total dividend declared for the first nine months of 2021 is 59.7 sen per share, which represents a 406% increase from the full year dividend for FY2020 of 11.8 sen per share.

What’s Top Glove’s outlook for the rest of 2021?

Despite falling ASPs and the ongoing US halt, the company stated in a press release that the global glove demand ‘remains resilient as glove usage continues to rise, driven by the ongoing pandemic’.

Looking ahead, Dato’ Lee Kim Meow, Managing Director of Top Glove, said the group is focusing on making the business ‘more sustainable’.

As such, the group has declared 2021 as ‘The Year of ESG (Environmental, Social and Governance)’.

As part of its plans to become a low carbon glove manufacturer, the group has put in place various initiatives to help ensure best environmental practices across its operations and supply chains.

With the group also coming under fire for its lack of care for employee wellbeing in the last one year, including for excessive overtime, abusive working and living conditions, debt bondage and withholding of wages, it has implemented new recruitment practices, launched several grievance and whistleblowing channels, and established a new wellness team.

For now, Top Glove is reportedly waiting for US customs authorities there to verify remedial action it has taken on workers' recruitment fees. It is still unclear when and if the shipment ban will be lifted.

Until then, Top Glove’s planned US$900 million listing in Hong Kong also remains in question, with investors raising doubts on the ban’s impact.

Nevertheless, Executive Chairman Lim Wee Chai said that ‘listing in Hong Kong is for the longer term’ and that the US ban ‘is only temporary’.

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