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The latest result of Top Glove. Lower ASP seems a common issue among glove makers in M'sia...
DJ Top Glove 1Q Net Slips 3.2%; Flags Lower Costs
By Jason Ng
KUALA LUMPUR--Top Glove Corp. Bhd. (7113.KU), the world's largest glove maker by volume, said Tuesday net profit slipped 3.2% in its first fiscal quarter largely due to a lower average selling price and higher costs of natural gas and electricity.
Net profit for the three months ended Nov. 30 was 48.7 million ringgit ($14.0 million) compared with 50.3 million ringgit during the same quarter a year earlier, Top Glove said in an exchange filing. Quarterly revenue slipped 1.1% from a year earlier to 567.6 million ringgit from 574 million ringgit even as sales volume rose 4%.
Natural latex price fell 12% to average 3.90 ringgit a kilogram while nitrile latex price declined 4.6% to an average of $1.04 a kilogram during the quarter, Top Glove noted.
Top Glove said its newest production plant would be operational by January 2015 while new factories would be built to produce nitrile gloves for developed markets. Lower raw material prices, strong U.S. dollar and falling oil prices would also help, Top Glove said.
"Demand is still strong and the industry is estimated to continue growing at 6% to 8% per annum," Top Glove Chairman Lim Wee Chai said.
Source: Dow Jones
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(16-12-2014, 05:05 PM)CityFarmer Wrote: The latest result of Top Glove. Lower ASP seems a common issue among glove makers in M'sia...
Well, think about it this way - when everyone manufactures the same gloves (nitrile for healthcare industry) and sells them en mass to more or less the same customers, you end up with an obvious price war situation. Competitive theory dictates that for any one player to gain market share at the expense of another, he would have to price his (commodity) products lower in order to induce customers to buy from him. Add to the fact that all the gloves players (Supermax, Hartalega, Kossan, Riverstone, UG Healthcare and Top Glove) are expanding capacity rapidly in the next few years, as evidenced by their stated plans in their Annual Reports, and you have a rather obvious situation brewing.
While the pie may be growing for all players, as the industry is expanding, the question here is whether the aggressive ramp up in capacity would result in a CAGR increase which exceeds the industry's growth rate. What would the implications be?
No player would be willing to give up "expansion" and capacity increases because doing so would make them fall behind their competitors, which is an unacceptable situation. But what investors have to measure is whether the incremental returns from the incremental increase in capacity are exceeding the firm's cost of capital - if it does not, then it makes sense not to expand and simply to rely on status quo and let others expand and erode their returns instead.
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(18-12-2014, 12:32 AM)Musicwhiz Wrote: (16-12-2014, 05:05 PM)CityFarmer Wrote: The latest result of Top Glove. Lower ASP seems a common issue among glove makers in M'sia...
Well, think about it this way - when everyone manufactures the same gloves (nitrile for healthcare industry) and sells them en mass to more or less the same customers, you end up with an obvious price war situation. Competitive theory dictates that for any one player to gain market share at the expense of another, he would have to price his (commodity) products lower in order to induce customers to buy from him. Add to the fact that all the gloves players (Supermax, Hartalega, Kossan, Riverstone, UG Healthcare and Top Glove) are expanding capacity rapidly in the next few years, as evidenced by their stated plans in their Annual Reports, and you have a rather obvious situation brewing.
While the pie may be growing for all players, as the industry is expanding, the question here is whether the aggressive ramp up in capacity would result in a CAGR increase which exceeds the industry's growth rate. What would the implications be?
No player would be willing to give up "expansion" and capacity increases because doing so would make them fall behind their competitors, which is an unacceptable situation. But what investors have to measure is whether the incremental returns from the incremental increase in capacity are exceeding the firm's cost of capital - if it does not, then it makes sense not to expand and simply to rely on status quo and let others expand and erode their returns instead. How about another possibility?
The coy who has very deep pocket can flood the market and drown out as many small competitors as possible.
My 2 cents.
WB:-
1) Rule # 1, do not lose money.
2) Rule # 2, refer to # 1.
3) Not until you can manage your emotions, you can manage your money.
Truism of Investments.
A) Buying a security is buying RISK not Return
B) You can control RISK (to a certain level, hopefully only.) But definitely not the outcome of the Return.
NB:-
My signature is meant for psychoing myself. No offence to anyone. i am trying not to lose money unnecessary anymore.
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A comment from a key market player in glove maker. I am sharing similar view. The industrial is having all the possible tailwind now, and over-supply will eventually arrive. I am waiting, for fire-sales of quality glove marker stocks, together with Top glove management... 
(not vested in any glove maker)
Top Glove a top pick among analysts
...
Lim also noted that the group is prepared for the expected cycles, where supply exceeds demand, as it has seen the industry go through several such cycles over the past 30 years.
“Oversupply may eventually cause the industry to go through a period of consolidation, during which the less-efficient players will be phased out and this bodes well for the industry, as it will balance up the supply and demand situation.
“Such a situation will also present opportunities for us to expand via merges and acquisitions (M&A),” Lim said, noting that the group is aggressively looking into expansion via M&A to increase its market share.
...
http://www.theedgemarkets.com/my/article...g-analysts
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Will it dilute the interest on Riverstone, once Top Glove is listed in SGX? May be...
(not vested)
Top Glove seeks secondary listing on SGX main board
KUALA LUMPUR (March 14): Top Glove Corp Bhd proposed to undertake the secondary listing of and quotation for all the company's existing shares, which are listed in the Main Market of Bursa Malaysia, to the Main Board of the Singapore Stock Exchange (SGX-ST) by way of introduction.
According to the filing to Bursa Malaysia, a shareholder holding Top Glove shares listed on Bursa Malaysia may transfer such shares to SGX-ST and vice versa for trading on the respective stock exchanges following the proposed secondary listing. The proposed secondary listing will not involve any issuance of new Top Glove shares.
The transfer is subject to the fulfilment of transfer conditions and criteria, the announcement said.
Top Glove also intends to explore with its substantial shareholders the possibility of selling a portion of their shareholdings in the company of approximately $20 million, or RM59.4 million, in value on the open market in Singapore.
Top Glove explained that the proposed secondary listing "is expected to enhance Top Glove's investor reach and diversify its investor base as well as allow direct participation by investors in Singapore in the equity of Top Glove".
Trading liquidity of the stock is also expected to increase with Singapore being widely recognised as a global financial hub, supported by high level of participation from international investors.
...
http://www.theedgemarkets.com/sg/article...main-board
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i don't think rubber gloves factories garners much popularity anyway
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A clinical and specialist medical service biz, with a major stake? Hmm...
(not vested)
Top Glove forms JV to venture into medical services business
KUALA LUMPUR (March 22): Top Glove Corp Bhd, the world largest rubber glove maker, is forming a joint venture (JV) with DHS Emergency Asia Sdn Bhd to provide clinical and specialist medical services in Malaysia.
In a filing with Bursa Malaysia today, Top Glove said its wholly-owned subsidiary Top Glove Sdn Bhd (TGSB) has entered into a JV agreement with DHS today, which will see the JV partners acquiring TG GD Medical Clinic Sdn Bhd as the JV company.
The filing disclosed that the ultimate equity structure of the JV is 75% TGSB and 25% DHS.
...
http://www.theedgemarkets.com/sg/article...s-business
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Commencement of Trading on the Singapore Exchange Securities Trading Limited
Trading in the ordinary shares of par value RM0.50 each in the capital of Top Glove Corporation Bhd is expected to commence on the Singapore Exchange Securities Trading Limited on a ready basis with effect from 9.00 a.m. on Tuesday, 28 June 2016.
The closing price of the Shares on Bursa Malaysia Securities Berhad on 27 June 2016 was MYR4.80 per Share.
Specuvestor: Asset - Business - Structure.
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Clarification on The Article Published in the Edge Financial Daily Dated 24 October 2017
The board of directors of the Company refer to the article published in The Edge Financial Daily titled “Top Glove said to buy Adventa’s surgical glove operations”, and, in particular, the following statements appearing in bold:
“Top Glove Corp Bhd is said to be acquiring the privately held surgical glove operations of Adventa Bhd.”
“Last week, Nikkei Markets, quoting a dealer, reported that the closest glove maker which meets the criteria and could sell its glove unit is Supermax Corp Bhd. The report said that the market is speculating that Supermax may dispose of its assets at a premium.”
The board of directors of the Company (“Board”) is constantly evaluating merger and acquisition opportunities as part of its business expansion strategy. The Board, however, wishes to clarify that Top Glove is not acquiring/buying Adventa Berhad or Supermax Corporation Berhad. Nonetheless, Top Glove is currently in negotiations to acquire a glove manufacturer (“Proposed Transaction”), the terms and conditions of which have not been finalised at this juncture.
Further details of the Proposed Transaction will be announced to Bursa Malaysia Securities Berhad in compliance with the requirements of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad once a definitive agreement has been entered into.
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Top Glove posts first quarterly net loss at RM53m since 2001 Malaysia listing
https://www.theedgemarkets.com/article/t...ia-listing
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