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Author: Tan KW   |   Latest post: Wed, 11 Dec 2019, 6:24 PM

 

COMMENTS ON TOP GLOVE CORP BERHAD (7113) - louisesinvesting

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Tuesday, November 19, 2019

 
FIGURE 1: TOP GLOVE CORP BERHAD LAST 5 YEARS SHARE PRICE TREND
 
**analysis based on 2019 annual report.
1.       GENERAL INTRO: Top Glove is one of the major glove manufacturers in Malaysia.
 
2.       NOTABLE POINTS:
a.       In its 2019 annual report, Top Glove is declared as the world's largest manufacturer of gloves, which exports to 195 countries worldwide.
b.      Nitrile gloves generates the highest revenue (46%), followed by Latex powdered (21%), Latex powder-free (18%) and others (15%). Sales of nitrile gloves is on decreasing trend while sales of powdered and powder-free latex gloves are on decreasing trend.
c.       Top Glove currently owns 33 glove factories, 682 production lines and has production capacity of 64 billion pieces per annum. Expansion of production capacity in progress to reach at 38 factories, 876 production lines and 84.2 billion pieces per annum capacity by December 2020.
d.      Top Gloves' last five years earning per share is steady, ranging from 12 to 17sen. At current share price, P/E ratio is at relatively high level (31). High PE level may be due to support by investors who are confident of the future prospects of Top Glove, which likely to have increased earnings once factories expansion has been completed.
 
3.       IS THIS COUNTER A STRONG GROWTH STOCK? 
a.       REVENUE RANGE (million): ~4801 million in 2019 annual report, this is a high revenue company.
b.      SHARE PRICE: from 2015-2019, share price dropped significantly in 2016 and 2018 due to stock splitting. Most of the time share price steady at around RM5
c.       EARNING PER SHARE (EPS): earning per share in last 5 years were steady, range from 12 to 17 sen per share.
d.      FUTURE POTENTIAL/PROSPECTS: quite dependable and reliable counter, share price expected to be stable.
e.      CAPITAL EXPENDITURE (CAPEX): spending on purchase of new fixed assets is RM 568 million, around 10% of total assets, due to factories expansion.
 
4.       IS THIS A STRONG DIVIDEND STOCK?     
a.       DIVIDEND YIELD: in 2019 report, Top Glove declared a total dividend payout of 7.5 sen per share, amounts to dividend yield of 1.63 % based on current share price.
b.      CONSISTENCY: consistent dividend payout, last five years (2015-2019) dividends declared range from 5.75 to 8.5 sen per share.
c.       DIVIDEND PAYOUT RATIO: in last five years Top Glove consistently paid out about 50% of its earnings to investors in the form of dividend.
 
5.       IS THE MANAGEMENT PERFORMANCE GOOD?
a.       RETURN ON EQUITY (ROE): in last five years, Top Glove has consistently good return of shareholders’ equity, range from 13 to 19%.
b.      COST-TO-INCOME RATIO: cost-to-income ratio is quite high about 1000%, Top Glove experiences strong competition from other manufacturers, causes it to absorb some of the increased cost, reducing profit margin.
 
6.       OTHER INDICATORS:
a.       CASH FLOW: cash flow is positive, around RM 159 million, equivalent to RM 0.06 per share
b.      SUPPORT BY INSTITUTIONAL INVESTORS: this counter is well supported by institutional investors, there are 18 institutional investors at top 30 major shareholders list, including EPF (7.659%), Firstway United Corp (7.173%), Kumpulan Wang Persaraan (3.8%) and few insurance companies and investment funds. Also noted Mr. Lim Wee Chai, who is the founder of the company, is also a major shareholder (26.801%).
 
 
Disclaimer: The content of the blog posts are for sharing purpose only. Readers are encouraged to carry out further research and analysis as well as follow up latest update information before making any investment decisions.

 
 

 

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Chart Stock Name Last Change Volume 
TOPGLOV 4.47 +0.02 (0.45%) 63,500 

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