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KUALA LUMPUR (September 17): Buying interest in Top Glove Corp Bhd appears to have evaporated after the group announced its best quarterly net profit of RM1.29 billion for the fourth quarter ending August 31, 2020 ( 4QFY20), which raised Top Glove’s annual net profit amounted to RM1.87 billion for the financial year ended August 31 (FY20).
In addition to the strong earnings growth, the group declared a final dividend of 8.5 sen / share, bringing the total dividend for fiscal 20 to 11.8 sen.
But Top Glove’s share price slid downhill during the afternoon trading session, following the posting of its solid quarterly earnings during the lunch break.
The stock fell below RM8 around 4.30pm to close at its intraday low of RM7.79, down 64 sen or 7.6% from Tuesday’s close of RM8.43.
The sell-off was considerably strong, with the stock falling nearly 12% from the day’s peak of RM 8.82. Trading volume increased to 198.9 million shares, making it the third most traded window in Bursa Malaysia.
“This is a considerably good performance, earning RM1 billion in a single quarter during such difficult times,” said a fund manager who attributed the liquidation to profit-taking, especially among retail investors.
Earning growth aside, another fund manager highlighted Top Glove’s strong cash-rich balance sheet with a stack of cash that has soared to RM1.2 billion as of Aug. 31, compared to RM347. .8 million as of May 31. The group’s total loans amounted to RM540.7 million.
Some quarters believe that short-term traders, who bought at the recent low around RM 6.50, are selling strongly to secure their gains as they took advantage of the positive news of record quarterly and annual gains of Top Glove.
The fall in share price has led Top Glove to be the third largest market capitalization stock in Bursa Malaysia, as its market capitalization fell to RM63.39 billion, behind Public Bank Bhd, whose capitalization market share is marginally higher than RM64.05 billion. and Malayan Banking Bhd, with a market capitalization of RM82.84 billion.
The Top Glove crash dragged FBM KLCI even lower in the afternoon session. The benchmark index lost 18.2 points or 1.2% to settle at 1,513.07 points.
The rubber glove giant’s quarterly net profit of RM1.29 billion for 4QFY20 is roughly 18 times the RM74.17 million it posted in the corresponding quarter last year, while revenue soared 161% to RM3 .11 billion from RM1.19 billion.
You have declared a final dividend of 8.5 sen, bringing the total dividend payment for fiscal year 20 to 11.8 sen per share, representing a payment rate of 51% of annual profit.
Earnings per share (EPS) for 4QFY20 was 15.95 sen from 0.97 sen a year ago, resulting in a cumulative annual EPS of 23.31 sen for fiscal year 20 compared to 4 , 76 sen for fiscal year 2019.
Strong fourth-quarter performance brought Top Glove’s annual net income to RM1.87 billion, the highest ever achieved by the world’s largest glove maker. This is a 412% jump from RM364.68 million in fiscal year 19, as annual revenue increased 50.7% to RM7.24 billion from RM4.8 billion.
Top Glove attributed the stellar set of gains to the increase in demand for rubber gloves after the COVID-19 pandemic, as well as productivity improvements that made it more efficient, with superior economies of scale achieved.
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