KUALA LUMPUR (March 7): MARC Ratings Bhd has maintained its rating of AA+ to Top Glove Corp Bhd but stated that its rating outlook for the glove maker has been revised to ‘negative’.

In a statement, MARC Ratings said the revised outlook to ‘negative’ from ‘stable’ was due to concerns on the impact of continued tough global market conditions.

The credit rating agency has also maintained the rating of AA-IS(cg) on Top Glove's wholly owned funding vehicle TG Excellence Bhd and revised the rating on its RM3 billion Perpetual Sukuk Wakalah Programme to ‘negative’. The outstanding perpetual sukuk stood at RM1.18 billion.

MARC Ratings stated that lingering imbalance in global supply-demand of gloves, weakened selling prices, hike in natural gas prices and increased labour costs contributed to lower profit margin.

Nevertheless, Top Glove retains a healthy liquidity position of RM742.5 million relative to its financial obligations as at end-November 2022.

“The group has no notable maturities over FY2023-FY2024, and with adjusted debt-to-equity (DE) of 0.22 times and net DE ratio of 0.09 times, it has the wherewithal to weather the challenging period,” said MARC Ratings.

The glove maker has also taken measures to shore up its liquidity position, including deferring expansion of production capacity, initiating temporary shutdown and decommissioning older production lines, while not declaring any dividends for FY2023.

“MARC Ratings will undertake a review on Top Glove’s rating within the next six months,” it said, stating that notable and sustainable improvements in the group’s credit profile could lead to the ratings outlook being revised back to stable.

Top Glove’s share price closed 2.5 sen or 3.47% lower at 70 sen on Tuesday, giving it a market capitalisation of RM5.7 billion.