KUALA LUMPUR: Shares in Top Glove Corp Bhd fell over 4% in early commerce Friday after it posted a decrease internet revenue of RM15.29mil within the third quarter ended May 31 (3Q22) from RM2.04bil in the identical quarter final yr.
The glove maker fell 4.1%, or 5 sen to RM1.17, its lowest thus far this yr with 19.7 million shares executed.
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In the primary 9 months to May 31, Top Glove posted a internet revenue of RM288.56mil, down 96% from RM7.26bil a yr earlier whereas income dropped 69% to RM4.5bil towards RM14.28bil achieved final yr.
In post-results updates on Friday, most analysts have trimmed their earnings forecast and goal costs (TP) on Top Glove.
MIDF mentioned Top Glove’s internet revenue for 9MFY22 of RM288.6mil got here in below expectations at 30% of the home and 58% of consensus FY22 estimates.
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“We revise down our forecast earnings for FY22F, FY23F and FY24F by -47.6%, -36.4% and -15.7% respectively in view of the declining average selling prices (ASPs) which severely impacted 3QFY22 earnings.
“Going forward, ASPs are expected to remain on a downward trend due to increasing vaccination rollout around the world and rising competition in the gloves industry,” the analysis home.
MIDF mentioned because of the downward earnings revision, its TP is revised decrease to RM1.29 (beforehand RM1.75) primarily based on FY23F earnings of seven.7sen multiplied by PER a number of of 16.7x. The dividend yield is estimated at 2.5% for FY22F.
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Kenanga Research mentioned Top Glove’s 9MFY22 internet revenue got here in at RM288.6mil (-96% YoY) which is below expectations at 55%/54% of its/consensus full-year forecasts, on account of lower-than-expected margins as enter uncooked materials prices fell slower than the sharper fall in ASP.
“This prompts us to cut our FY22E/FY23E net profit by 40%/37%. TP is also lowered from RM1.30 to RM0.95 based on 22x FY23E EPS, a 30% premium to peers’ average largely to reflect its bigger market capitalisation. Reiterate underperform,” it added.
Hong Leong Investment Bank (HLIB) has lowered its projections for FY22-24f by 18-47%, because it lower utilisation charges forecast for FY22f/23f/24f to 60%/ 78%/81%, to raised replicate the robust working setting.
“Consequently, our TP is lowered to RM0.82 (from RM1.12), representing a PE multiple of 17.3x (at mean to its 5-year pre-pandemic average) on its FY23f EPS of 4.8 sen. Reiterate ‘sell’ on Top Glove,” it mentioned.
HLIB opined that the headwinds confronted (greater working prices and utilisation charges below pre-pandemic ranges) by gloves gamers at the moment will persist for a bit longer, on condition that the demand-supply imbalance has but to normalise.
“That said, we think that utilisation rate may still see small improvements on a QoQ basis, as the sales volume to the US continues to recover. Also, the end of wintering season and lower demand from glove manufacturers should lead to soft er latex and nitrile butadiene raw material prices going forward.
“Besides, we note that some of the smaller glove players in the market are looking to exit the industry completely due to the intense competition and tough operating environment. While this would help ease the oversupply situation slightly, we reckon that concerted effort from all major glove makers is still required to normalise the demand-supply mismatch.
“Top Glove has also indicated that it is not in a hurry to acquire more glove plants, as it still has idle capacity to be filled currently,” it mentioned.
