KUALA LUMPUR: Malaysia’s largest glove maker Top Glove Corp Bhd will downsize its Hong Kong initial public offering (IPO) to raise RM4.22bil, instead of the initially planned RM7.7bil.
The revised offering will see the issuance of up to 793.5 million new Top Glove shares from 1.495 billion shares previously.
“The revision to the number of new Top Glove shares to be issued under the proposed issuance of new shares takes into consideration the best interest of the group’s existing shareholders by minimising dilution to the existing shareholders’ respective shareholdings, ” it said in a filing with Bursa Malaysia.
According to its statement, the issuance of up to 793.5 million shares represents about 9.91% of the total issued Top Glove shares of 8.004 billion as at the latest practicable date (LPD) and about 9.02% of the enlarged Top Glove shares after the proposed issuance of new shares of 8.8 billion shares.
The group’s earnings per share (EPS) is expected to be proportionately diluted as a result of the increase in the number of shares
“The group wishes to highlight that it has achieved better profits in the recent quarters for financial year 2021 (FY21) as compared to the corresponding quarters for FY19 and FY20. As such, the group expects the EPS dilution will be mitigated.
“The proposed issuance of new shares may contribute positively to the group’s earnings and EPS in the future through the use of proceeds, ” it added.
Top Glove said 60%, or RM2.49bil, of the proceeds will be used for the expansion of its production capacity and to develop a data-driven manufacturing system.
The proceeds will also be used for research and development (10%), upgrading of various software systems and acquisition of information technology such as artificial intelligence and big data (10%), potential merger and acquisition and other investment opportunities (10%), environmental, social and corporate governance practices and initiatives (5%) as well as working capital and general corporate purposes (5%).
The Covid-19 outbreak has, notably, substantially increased the demand for the group’s glove products worldwide.
“Due to the rising demand, the average utilisation rate of the group’s production facilities increased to 88% for FY20.
“The facilities have been running at a high capacity and the group expects the demand for its glove products to continue to rise after taking into consideration the rollout of vaccines, which will stabilise the demand.
“However, glove demand on quantity basis is expected to continue to grow post-pandemic, ” it said.