KUALA LUMPUR (June 8): Top Glove Corporation Bhd had spent RM1.42 billion on buying back its shares over a five-month period until February 2021, but currently these shares are valued at only RM236.2 million.
This comes as the stock was badly battered and dived to its lowest since December 2017.
The world’s largest glove manufacturer spent the RM1.42 billion repurchasing 200.17 million of its shares. Based on the closing price of RM1.18 on Wednesday (June 8), the shares are worth RM236.2 million, a difference of RM1.19 billion.
It should be noted that Top Glove has said previously that it did not have to book any paper loss from the buyback activity, as the exercise is not deemed as an investment.
The group has also referred to paragraphs 33 and 34 of MFRS (Malaysian Financial Reporting Standards) which state that treasury shares are not an investment, but rather an equity which is captured at acquisition costs.
“No subsequent remeasurement is required as these are equity instruments, hence they would not be impaired at any point in time and the question of ‘paper loss’ does not arise,” it stressed.
Top Glove started buying back its shares shortly after its share price was adjusted to RM8.37 on Sept 3, 2020 from RM26.08 on the previous day to reflect the group's two-for-one bonus issue. The group’s issued share capital was enlarged to 8.13 billion shares from 2.71 billion shares after the bonus issue.
The shares were bought at between RM5.78 and RM8.01, with the bulk of the shares purchased between Nov 10 and Nov 27, 2020.
Meanwhile, Top Glove is set to release its financial results for the third quarter ended May 31, 2022 (3QFY22) on Thursday (June 9).
According to Bloomberg data, the earnings consensus for Top Glove for the full financial year (FY22) is RM526.4 million, sharply lower than the RM7.87 billion recorded by the group for FY21 and RM1.75 billion for FY20 — when the glove demand was at its peak and propelled the glove average selling price upwards due to the Covid-19 pandemic.
Top Glove would need to achieve an average of RM126.57 million in earnings per quarter in 3QFY22 and 4QFY22 to meet market expectations. This translates into an average earnings growth of 45% from 2QFY22.
Top Glove's net profit for 2QFY22 dropped 52.86% to RM87.55 million from RM185.72 million in 1QFY22, while revenue decreased 8.51% to RM1.45 billion from RM1.58 billion as average selling prices normalised closer to pre-pandemic levels, which offset an uptick in sales volume.
On a year-on-year basis, the 2QFY22 net profit was down 96.95% compared with RM2.87 billion in 2QFY21. Revenue also tumbled 72.99% from RM5.37 billion.
Among the analysts covering the stock tracked by Bloomberg, 13 brokers have issued "sell" calls for the stock, nine are recommending “hold”, while one is maintaining a “buy” call.
The consensus target price is RM1.47, representing an upside of 24.58% against Wednesday's closing price of RM1.18.
Year to date, Top Glove shares have declined 51% from RM2.39 on Jan 3.
Source: TheEdge - 9 Jun 2022
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Created by edgeinvest | Aug 16, 2024
Stock: [TOPGLOV]: TOP GLOVE CORP BHD
Dec 2, 2020 7:57 PM | Report Abuse
What is the difference when come to SBB Parkson vs Top Glove?
Parkson started SBB from 6.70 (01.04.2008) all the way to 0.615 (31.01.2017) for whopping rm 2.1 billion.
Top Glove started SBB from 8.00 (04.09.2020) to 6.70 (02.12.2020) with lowest price paid 6.12 (10.09.2020).
Both companies were buying back everyday non-stop, and prices still drifting downwards non-stop.
Why SBB?
Why even with non-stop SBB (created artificial demand) but sellers keep coming?
Who are the sellers?
Why supplies exceed demands?
Simple logic of supply/demand equilibrium and you need not be an economist to understand that!
Note: Parkson has since sold all treasury shares at huge loses even at low of 19 sen. https://klse.i3investor.com/servlets/stk/annshrtxn/5657.jsp
2022-06-09 17:33
Nov 25, 2020 10:27 AM | Report Abuse
12. Share Buy-backs are weakening the balance-sheets even of the most cash-rich firms.
Is Parkson really cash rich? How about 89.39m interest paid for 9 months on 2.49 billion borrowings? Since 2008, WC already used up 2.1 billion to buy back Parkson shares, otherwise he could have saved 75m on interest payment for 9 months.
13. Parkson share buy-back has become a kind of corporate cocaine that induces a temporary feeling of invincibility but masks weakness and vacuity. It has become a norm for any punter to buy by 4.30pm, then park to sell at 4.49pm. WC is going to pay these punters 'toll' to push up closing price everyday. He cannot stabilize Parkson share price with such tactic, but just draining the valuable cash.
Worst still it become clear for WC to commit suicide by drinking sea water in the ocean to quench thirst (飲鳩止渴).
Sooner or later Parkson is going to bleed to death.
14. Please don't tell me WC cannot understand the logical reasoning above. To me, he is paying peanuts to get monkeys to run his business empire -- from the very top to the sales personnel.
Don't believe, just go to any Parkson outlet to see what are the sales girls doing......
NOTE:
WC SBB amounts to about rm 2.1 billion, starting from around rm 6.70 to about rm 1.60. Now all the cash gone.
Top Glove start buy back its own share at around rm 8.00
Will the company spend spend rm 2 billion to prop up its share price?
Paid up capital in terms of number of shares outstanding is much bigger than Parkson. Can amount (say rm 2 billion) enough to stop its price to drift lower and lower each day?
How much Tan Sri Glove has bought back with SBB?
And the share price still falling?
https://klse.i3investor.com/servlets/stk/annshrtxn/7113.jsp
2022-06-09 17:35
When paying dividend, what happen to:
1) The company: An amount of cash money flowing out.
2) The shareholder: Receiving cash money.
When buying back shares, what happen to:
1) The company: An amount of cash money flowing out.
2) The shareholder: No change in number of shares but ownership become higher in term of percentage.
The case of TOPGLOV.
1) Spent 1.42b to buy back 200m shares over the 5 months span, or about 2.5% of total o/s shares.
2) If you hold 100,000 shares and you do not agree with the company on share buy back.
3) Then you could have sold 2.5% or 2500 shares and received around RM17,750.
4) That RM17,750 become kind of dividend, and you maintain the same ownership in term of percentage.
So, to me, Share Buy Back is kind of dividend payment.
2022-06-10 12:57
arv18
Teach them all a good lesson to simply pump shares with bonus issues, during the boom period.
Stop doing bonus issues. Too many shares, makes it very hard to liquidate in a thin market like Bursa.
They should be doing the opposite - share consolidation and cancellation.
2022-06-09 13:43