Posted by AdCool > 2021-01-23 17:21 | Report Abuse

These are what I think too. Top Glove would be the immediate and promptly beneficiaries of this new policy from Biden administration. Why I said so? The ban on Top Glove since July 2020 would mean that Top Glove warehouse in US is currently full of gloves which have been stocked up since then as logistic arrangement and shipping would take weeks to reach US soils. Hence, even after ban, there would be shipment that are OTW as well as shipment that already been shipped out from Top Glove factories.

Estimating that with 2% sales drop per quarter to North America and with a 2 weeks turnover of inventory, the current warehouses in US could have roughly 515 millions of gloves. This is provided that Top Gloves no longer stock up the inventory in US after mid August due to the ban.

Posted by Ben Tan > 2021-01-23 17:29 | Report Abuse

AdCool, thank you for your comment.

Just a couple of quick notes - the 2% sales drop is year-on-year. In other words, it's the difference between 1QFY20 (September-November 2019! long before COVID) and 1QFY21 (September-November 2020). Bear in mind that this is for the entire North America region, which also includes Canada (a large per-capita glove user) and Mexico. The drop quarter-on-quarter between 4QFY20 and 1QFY21 must be substantially bigger than 2%. Thus, the US warehouse stock may actually be quite a lot larger than 500 million pieces.

Posted by AdCool > 2021-01-23 17:31 | Report Abuse

Just a note that I am using a 85.5 billion production capacity per year. So per quarter is 21.375 billion. Losing a 2% due to North America, that would be 427.5 millions of gloves. With inventory turnover of 2 weeks, that would be a margin of inventory buffer of 427.5/12weeks (3 months) x 2 weeks = 71.25 million. Hence, conservatively, there could be 427.5 mil + 71.25 mil = 498.75 mil of gloves being withhold in US. Plus minus margin of error of 3% that would be roughly 513.7 mil being the upside. Of course there could be factors on warehouses storage limit or there could be more shipment after mid August or Top Glove could have stopped all the shipment immediately after the ban.

Posted by AdCool > 2021-01-23 17:36 | Report Abuse

Ben Tan, i only give a rough calculation based on the latest production capacity before the 91 billion being achieved in Dec 2020, hence 85.5 bil as the base calculation.

Posted by Ben Tan > 2021-01-23 17:50 | Report Abuse

Based on my rough calculation, if they have a 2-week inventory ready, they should have about 690 million pieces in the US (assuming 25% of sales/deliveries went to the US pre-ban). That's based on the 85.5 billion pieces yearly production reported in August, and 85% utilization rate.

If they sell them at $150/1,000 pieces spot price, that's a little over RM40,000,000 extra revenue. Not bad :)

Posted by AdCool > 2021-01-23 17:51 | Report Abuse

Should the DPA is being executed, it would override the ban and US would distribute all these readily available gloves in US soil.

Posted by Ben Tan > 2021-01-23 17:52 | Report Abuse

Let's hope so!

Posted by pjseow > 2021-01-23 18:24 | Report Abuse

Ben and Adcool, out of the 36 factories, there are 2 in Thailand , one in China and one in Vietnam. These 4 factories are not banned by US. Topglove can still ship gloves from these 4 factories to US. These 4 factories represent 11 % of Topglove production volume assuming all factories has equal volume.This is the reason why Topglove revenue is not much affected by the ban by US on gloves produced by the Malaysian 32 factories

Posted by Ben Tan > 2021-01-23 18:29 | Report Abuse

pjseow, thank you for your comment.

Indeed not the full capacity of Top Glove is affected by the ban, and this is the reason why the fall in sales is not sharper.

Posted by Targeted > 2021-01-23 18:34 | Report Abuse

Nice one.....

Posted by AdCool > 2021-01-23 18:50 | Report Abuse

The plants in China and Vietnam are producing Vinyl gloves. Thailand plants are producing Latex gloves. Anyway the plan is to build 1 more Nitrile glove plants in Thailand by 1st Quarter 2021.

Posted by calvin69 > 2021-01-25 10:04 | Report Abuse

I would not be surprised to see the US ban lifted on Top Glove within the next couple of months... Biden does not want a shortage in PPE to hinder America's Covid fight

Posted by Ben Tan > 2021-01-25 10:14 | Report Abuse

Targeted, AdCool, calvin69, thank you for your comments once again.

AdCool, that is a very valid point. Unfortunately I haven't seen Top Glove break down their revenue by region. That would allow us to understand better the financial impact of the ban.

calvin69, my expectation is that this will be one of the very first things that will happen once Biden gets around to dealing with the PPE situation.

Posted by calvin69 > 2021-01-25 10:33 | Report Abuse

Agreed, and Top Glove has now resolved the worker accomodation issues, so should be reason for the CBP to remove the ban