KUALA LUMPUR, March 10 — Top Glove Corporation Bhd is expected to be listed on the Stock Exchange of Hong Kong Ltd (HKEX) by May or June this year, the exact time depending on factors such as the HKEX’s vetting process, approvals from the relevant authorities and market conditions.
On February 26, 2021, Top Glove announced its plan to undertake a dual primary listing exercise on the main board of HKEX to raise up to RM7.7 billion; of which RM4.61 billion would be used to expand its production capacity and for the development of a data-driven manufacturing system.
Describing the listing plan as timely, executive director Lim Cheong Guan shrugged off concerns over earnings and dividend dilution of the existing shares for the glovemaker’s shareholders.
“The group has seen strong profits in the past few quarters, and the earnings per share (EPS) and dividend per share (DPS) dilution will be mitigated via the strong profits and the intended dividend payout for Q2-Q4 for the financial year ending August 31, 2021 (FY21),” he said.
Lim said this during the company’s virtual briefing on the results of the second quarter of the financial year ended February 28, 2021 (Q2 2021), yesterday.
In a bourse filing today, Top Glove said its net profit surged by more than 24 times to RM2.87 billion in Q2 2021 from RM115.68 million in Q2 2020, while revenue soared 336 per cent to RM5.37 billion from RM1.23 billion previously.
For the cumulative six-month period ended Feb 28, 2021 (1H21), its net profit hit RM5.23 billion, about 22 times that of last year’s RM227.11 million, while its revenue during the period surged to RM10.12 billion from RM2.44 billion previously.
According to Lim, HKEX is a large and active market, with a market capitalisation that is 15 times larger than that of Bursa Malaysia and 10 times larger than the Singapore Exchange Ltd (SGX).
“The dilution effect will be the same whether the fundraising is conducted on Bursa, SGX or HKEX.
“However, the proposed additional listing on the HKEX also serves to raise Top Glove’s profile in China, which is in line with our overall strategy to explore business expansion and strategic opportunities in China or North Asia,” he said.
Lim added that the group’s HKEX listing is also aimed at attracting new groups of investors from North Asia, which may not invest in Bursa Malaysia or SGX.
On the group’s rationale for the cash-raising exercise, which would see it issuing up to 1.5 billion new shares on HKEX, he said the current conditions are right for the company to raise funds via equity, as the company’s share price valuation is at a good value.
“Meanwhile, the existing cash from strong earnings of the past few quarters will be used to reward existing shareholders via a dividend, as we intend to increase our dividend payout to 70 per cent for Q2 2021 – Q4 2021 with special dividends, as announced previously, “ he said.
Asked if Top Glove would continue to commence payment of special dividends beyond Q4 2021, executive chairman Tan Sri Dr Lim Wee Chai said it depends on the market conditions.
On the company’s share buybacks, Lim Cheong Guan said the move was aimed at maximising shareholders’ returns and the value of their shares.
“We had conducted the share buybacks at a time when we considered our valuation was low in view of the strong earnings, coupled with a high dividend yield in comparison with the interest in fixed deposit or money market placement,” he said.
On the development of the import ban by the United States Custom and Border Protection (CBP), managing director Datuk Lee Kim Meow said the company had submitted its corrective action plans for CBP’s review and approval.
“Based on the verifications conducted by the independent consultant on our progress in implementing the corrective action plans, the independent consultant’s opinion was that there is no systematic forced labour within the group,” he said.
Back home, Lee said as at February 2021, Top Glove had complied with the required spacing and provision of amenities in accordance with the Workers’ Minimum Standards of Housing and Amenities Act 1990 (Act 446).
Moving forward, Lim Cheong Guan said the group expected to see stronger performance in 2H21, backed by the additional new capacity from ongoing expansion, higher utilisation of plants, strong demand, higher average selling price and lower raw material costs.
— Bernama
