Top Glove’s earnings to be anchored by capacity-led expansions
KUCHING: Top Glove Corporation Bhd’s (Top Glove) earnings are expected to be anchored by capacity- led expansions, with some analysts forecasting an eight to 10 per cent capacity growth for financial year 2019 (FY19).
AmInvestment Bank Bhd (AmInvestment Bank) projected that Top Glove’s earnings would be driven by capacity-led expansions, going forward.
“We estimate revenue to grow by 20 per cent in FY19F, underpinned by 11 per cent increase in production volume,” the research firm said.
Meanwhile, Affin Hwang Investment Bank Bhd (Affin Hwang) forecasted an eight to 10 per cent capacity growth for FY19, which is lower than the 15 to 17 per cent increase in capacity in FY18.
It noted that Top Glove’s current capacity is circa 60.5 billion pieces per year.
“Despite the inclusion of the new capacity, utilisation rates remain at elevated levels of around 90 per cent, a good indicator that demand remains robust,” Affin Hwang said.
AmInvestment Bank highlighted that Factory 32 and Factory 33 are slated to commence operations in FY19F.
The research firm further highlighted that this would raise annual production capacity from 60.5 billion in FY18 to 67.1 billion pieces of gloves in FY19F.
“Its newest factory, Factory 8A in Thailand is expected to commence operations in early 2020, adding in circa 9.8 billion of capacity in FY20F.”
According to AmInvestment Bank, Top Glove remained on the lookout for synergistic mergers and acquisitions (M&As) to further strengthen its positioning as the world’s biggest rubber glove supplier.
“Management is confident that it will be able to expand its global market share from 25 per cent to 30 per cent by 2020.
“The global demand for rubber gloves is expected to remain healthy with an annual growth rate of circa 10 per cent.”