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KUALA LUMPUR (Oct 7): Top Glove Corp Bhd told analysts that the company will begin paying dividends on a quarterly basis beginning with the financial year ending Aug 31, 2021 (FY21), and that a special dividend is possible through as the group moves away. of your current semi-annual payment scheme.
UOB Kay Hian Private Ltd analyst Philip Wong, who attended a recent conference call with Top Glove, wrote in a note today that if Top Glove declares special dividends, it will be for the third quarter of fiscal year 21 (3QFY21) at the latest. soon.
“Based on the company’s 50% dividend payment policy and our projected earnings, the implicit dividend yield for fiscal year 21 is 7.7%. For each additional 10% payment, the dividend yield increases by 1.6%. That said, dividend yields would moderate to 2.1% and 1.2% for fiscal year 22 and fiscal year 23 respectively, “Wong said.
Wong said today that Top Glove during the conference call also provided updates on the status of the arrest warrant from the US Customs and Border Protection (CBP) on disposable gloves made by two of the company’s subsidiaries. , namely Top Glove Sdn Bhd and TG Medical Sdn Bhd. from July 15, 2020.
On July 16, Top Glove said in a Bursa Malaysia filing that there was a possibility that the arrest warrant could be related to foreign labor issues.
Today, Wong said Top Glove indicated during the conference call that it was still unsure when CBP’s arrest warrant, also known as the Withholding Order of Release (WRO), will be lifted.
Wong said: “Top Glove announced a review of its foreign worker remediation worth RM136 million, almost three times higher than management’s initial expectation of RM53 million. The deviation arises from official foreign government hiring fees, versus agency-imposed fees, discovered only through an audit interview with its foreign workers.
“The lifting of the WRO on the two Top Glove subsidiaries now falls to CBP without an indicative timeline. That said, [Top Glove’s] Utilization rates remain peak as demand remains strong and sales to North America contribute a healthy 20% of the overall sales mix. The WRO problem has been alleviated with diverted sales through other subsidiaries not affected by WRO. Therefore, we believe that the lifting of the WRO by CBP is not a factor for now, ”he said.
More to come
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