15/02/2024 05:24 PM

KUALA LUMPUR, Feb 15 (Bernama) -- AmInvestment Bank Bhd has maintained its “hold” call on Top Glove Corporation Bhd, retaining its financial year 2024-2026 core earnings forecast.

In a research note today, the investment bank said Top Glove guided that the impact of the recent Red Sea crisis would be minimal as it expects a 15 per cent-20 per cent quarter-on-quarter sales volume growth in the second quarter of 2024 (2Q 2024), which is consistent with the bank’s forecast.

It noted that this differs from Hartalega Holdings Bhd’s recent result underperformance owing to Red Sea-related shipment delays.

“We attribute the deviation to Top Glove’s 1Q 2024 revenue exposure to less impacted regions such as Asia (32 per cent), Latin America (12 per cent) and Eastern Europe (12 per cent),” it said.

The bank said, following a recent pick-up in demand, Top Glove is gradually ramping up manpower and capacities that were previously idle.

“We gathered that the process could take three months, during which foreign labour will be recruited and production lines (primarily cleaning procedures) will be initiated,” it said.

It said that despite input material price reductions since December 2023, the average selling price (ASP) for nitrile gloves remains unchanged to facilitate margin expansion.

“We view this pricing strategy to be more aggressive than some cost-competitive local peers, as they lowered ASP in 4Q 2023 by passing through the lower costs,” it said.




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