Highlight Top Glove's FY15 earnings hits record high, recommends 12 sen dividend

by **Cals** Thu 15 Oct 2015, 17:48

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[size=28]Top Glove's FY15 earnings hits record high, recommends 12 sen dividend

By Gho Chee Yuan / theedgemarkets.com | October 15, 2015 : 2:41 PM MYT

KUALA LUMPUR (Oct 15): Top Glove Corp Bhd (Top Glove) ([You must be registered and logged in to see this image.] Valuation: 1.10, Fundamental: 2.50) saw its net profit for the fourth quarter ended Aug 31, 2015 (4QFY15) surge 122.63% to RM103.12 million or 16.68 sen per share from RM46.32 million or 7.47 sen per share in the last corresponding quarter.

This is the record earnings for Top Glove, according to its filing with Bursa Malaysia today. It attributed the better earnings to the cost efficiency effort, including concerted efforts in automation, research and development (R&D) and re-engineering.

"The newer and more efficient production lines, as well as glove quality enhancements also contributed to higher margins," it said.

Top Glove said the sustained turnaround in its China operations coupled with the stronger dollar and weak raw material prices also contributed to its bottomline.

Revenue for the quarter, grew 22.51% on year to RM709.45 million from RM579.11 million last year due to the same reason.

Top Glove declared a 12 sen dividend for the current quarter under review, bringing its full year dividend to 20 sen per share. The dividend is pending approval from shareholders at the forthcoming Annual General Meeting (AGM).

For the full year, the world's biggest rubber-glove maker posted a 55.2% jump in net profit to RM280.15 million from RM180.52 million in FY14.

Revenue for the period added 10.1% to RM2.51 billion against RM2.28 billion a year earlier.

“Our 4QFY15 and FY15 represent a new historical high for Top Glove, even better than the record high we set in the 3Q. We are very pleased with our performance, as the greatest satisfaction comes from bettering our results continuously,” the founder and chairman of Top Glove Tan Sri Lim Wee Chai said in a separate statement.

"We view the strengthening US dollar as a bonus. However, we cannot and do not rely on temporal factors to boost our performance," he said, but adding the only way to enduring success is through an unwavering focus on quality and cost efficiency.

Lim said the group will continue to aggressively pursue capacity expansion, building new optimised facilities that feature faster, more efficient and technologically-advanced production lines towards better profitability and cater the rising demand.

On its expansion plan, Lim said the all the group's expansion plans are on tracks. Currently, Top Glove is embarking on expansion exercise on Factory 27 in Lukut, Port Dickson (to commence production by February 2016) and Factory 6 in Thailand (to commence production by August 2016).

It also in the midst of constructing a new facility, Factory 30 (to commence production by February 2017) which will respectively bring the number of production lines and capacity to 540 and 52.4 billion gloves per annum.

To complement organic expansion, Top Glove is also keenly pursuing merger and acquisition (M&A) opportunities that synergise with its current business, in similar or related industries.

Meanwhile, Top Glove has proposed a bonus issue of up to 630.69 million, on the basis of one for one basis.

Going forward, Lim said Top Glove remains alert to challenges ahead.

He expects the environment will continue to be competitive as glove players increase their nitrile glove capacity.

"Nonetheless, Top Glove is upbeat in terms of outlook, reiterating that as an essential item in the healthcare sector, the demand for rubber gloves will keep growing steadily at a rate of 5% to 6% every year," he added.

He pointed out that the group will also further intensify its efforts, pressing ahead with its on-going quality and efficiency initiatives.

“We have now reset the bar for ourselves at a higher level. Hence, we must work even harder, smarter and faster to improve our quality, costing and service," Lim added.

As at 12.30pm midday break, Top Glove was trading at RM8.23, up 18 sen or 2.24%, after 1.06 shares traded. It has a market capitalisation of RM5.11 billion.

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(Note: The Edge Research's fundamental score reflects a company's profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)
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