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KUALA LUMPUR (Nov 25): Top Glove Corp Bhd Chief Executive Officer Tan Sri Dr Lim Wee Chai said today that the company’s estimated dividend yield will be more than 6% in the current financial year ending 31 August 2021 (FY21), because the company is expected to do well as the Covid-19 pandemic generates demand for rubber gloves.
“We know that the company will continue to perform well, especially for fiscal year 21,” Lim said at a virtual press conference today.
When asked if Top Glove’s recent share buybacks are considered aggressive, he said he believes “it is a good recommendation from management to buy. [the shares]. “
According to Lim, Top Glove’s current net cash position is around RM2 billion, after the company spent about RM1 billion on share buybacks over the past three months.
Top Glove shares have been under selling pressure, following positive news about the Covid-19 vaccine trials and as investors weighed the company’s updates on the impact of the staged temporary shutdown of its manufacturing facilities within of Meru in Klang, Selangor to slow the spread of the pandemic.
In Bursa Malaysia today, Top Glove’s share price closed 15 sen or 2.21% lower at RM6.65, which values the company at around RM54.5 billion. The stock saw around 76 million shares traded.
According to Top Glove filings in Bursa, the company declared a dividend of 8.5 sen / share for 4QFY20, bringing the accumulated dividends for the full year to 11.83 sen / share.
Based on Top Glove’s closing share price at RM6.65 today, full-year dividends at 11.83 sen / share translate to a dividend yield of 1.78%.
It was reported today that Top Glove has lost more than RM12 billion in market capitalization since the beginning of November 2020, as positive news about Covid-19 vaccine trials was perceived as negative to glove manufacturers in anticipation of that there will be less demand for gloves.
The news of the staged temporary shutdown of Top Glove’s manufacturing facility in Meru didn’t bode well for the company’s actions, either.
However, at first glance, the selling pressure on Top Glove shares appeared to have eased today after the share price fell as much as 20 sen or 3% to RM6.60 compared to yesterday’s 7% drop. when the markets closed.
Top Glove said in a Bursa filing yesterday that the company estimates that about 3% of its fiscal year 21 sales revenue will be affected by the staged temporary shutdown of Top Glove’s Meru manufacturing facility.
Authorities implemented the Enhanced Movement Control Order (EMCO) driven by Covid-19 from November 17-30 at Top Glove-specific foreign worker dormitories in Meru.
At the Top Glove’s Bursa presentation yesterday, the company, referring to EMCO’s impact on its production capacity, said that the 28 affected facilities in Meru represent about 50% of the glove maker’s total production capacity.
“As a mitigation measure, the company has rescheduled production plans for unaffected facilities to produce the most urgent orders,” Top Glove said.
According to updates on the Top Glove website, the world’s largest rubber glove manufacturer by production capacity can produce up to 90 billion pieces of gloves per year by October 2020 at its 36 glove factories.
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