Top Glove to continue share buyback trend

“We are in a net cash position of RM3.4bil. Our high cash generation enables us to fund the capital expenditure internally but also for strategic expansion, ” its executive director Lim Cheong Guan (pic) said at a press briefing yesterday.

PETALING JAYA: Top Glove Corp Bhd is poised to continue with its share buyback activity as its cash pile has swelled to more than RM3bil.

“We are in a net cash position of RM3.4bil. Our high cash generation enables us to fund the capital expenditure internally but also for strategic expansion, ” its executive director Lim Cheong Guan (pic) said at a press briefing yesterday.

The company, which has been actively buying back its shares in recent times, also indicated that in its view its share price at the current level is still considered cheap.

“Based on the consensus, the profit anticipated by analysts for financial year 2021 (FY21) is RM8bil. So, the price to earnings ratio (PER) at this price should be very cheap at below eight times. And the dividend yield is also very good at 6%-8%, all these are good value for money while the company is still growing, ” Top Glove’s chairman Tan Sri Lim Wee Chai said.

StarBiz recently reported on Dec 1 that since September, Top Glove has spent close to RM1.14bil to buy back its own shares from the market.

Following these aggressive share buyback exercises, Top Glove said it has 177.78 million of net outstanding treasury shares to-date.

Its adjusted share issue capital is 8.196 billion shares and its capitalisation as of Dec 9 was RM56.06bil. On what it plans to do with the growing cash pile, Top Glove said it would plan more dividends, capex expansion and strategic investments.

“We are always (also) on a lookout for any acquisition opportunities and we will announce if there are any special dividends, ” the company said separately.

The largest rubber glove manufacturer in the world said it is expecting another year of historical highs in terms of its financial performance due to the continued strong demand in gloves.

“This first quarter is a strong and healthy start for FY21 ended Nov 30. The revenue for the first quarter alone is (already) 66% of FY20’s whole year revenue, ” Cheong Guan said at the beginning of the press briefing.

“Our net profit (of RM2.38bil) had also exceeded our FY20 full-year profit by 134%, ” he added.

On the continued progress of a Covid-19 vaccine, Top Glove’s managing director Datuk Lee Kim Meow said the company is paying close attention to the actual effectiveness of the vaccine once a mass rollout is in place.

“There are many reports saying that this is the fastest vaccine ever to be developed for a major pandemic. So the effectiveness is still not proven as of yet even though there are claims from the manufacturers, ” Lee said.

“In the weeks to come, a lot of people will be watching this trend.

“If some of these vaccines prove to be ineffective, scientists would still continue to search for an effective vaccine, ” he added.

Meanwhile, the company said it would be able to go back to full capacity in two to three weeks ‘time following the Covid-19 outbreak that was detected among its workers recently.

“The 5,000 positive cases have already been discharged and they are fit to work. In fact, they have been sent to the hospital for isolation for only about five to six days and have been discharged now to stay in the worker’s hostel and some of them are coming back to work, ” Wee Chai said.

“They are fit to work after obtaining a letter from the Sungai Buloh Hospital. They have no symptoms.

“Even though they are sent to hospital, actually it’s not that serious, ” he added.

Top Glove also said that in the near future, it will shift its hiring strategy to employ mainly locals for its factories, moving away from a high reliance on foreign workers prior to this.