Malaysia’s Top Glove eyes Hong Kong listing on back of coronavirus boom
- The firm expects demand to continue post-pandemic, as gloves and other gear will still be required even after a Covid-19 vaccine is developed
- If Top Glove manages to list in Hong Kong, it will be able to tap into a wider international investor base, one analyst says
The firm – currently listed in Malaysia and Singapore – revealed its Hong Kong listing plans on Thursday when it announced it recorded 1.87 billion ringgit (US$454 million) profit for the financial year ending August 31.
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Executive chair Lim Wee Chai said the company was already in talks to do so, as it makes a bid to become “visible in the world market”.
“We are talking to the bankers to see which is the most suitable method to go for listing in Hong Kong,” Lim said in a virtual briefing. “As a whole, we are a global company, we must expand our company to a bigger market.”
“With a triple-digit increase in the group’s monthly order book and lead times closing in on the two-year mark, we expect to continue delivering solid results well into the financial year 2021,” Lee said, with Top Glove projecting growth of 25 per cent for 2021, and 15 per cent post-pandemic.
Top Glove’s “supernormal level” demand during the pandemic was led by strong growth in Asia, Western Europe and Eastern Europe, which rose by 110 per cent, 73 per cent and 64 per cent respectively, compared with the same period last year.
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According to some analyst reports, Top Glove could grow by more than 10 times, with investment bank UOB Kay Hian saying that demand was expected to remain robust, barring disruption to its production or supply chain caused by the outbreak or the discovery of a vaccine.
Top Glove currently has the capacity to produce 85.5 billion glove pieces a year and has earmarked 8 billion ringgit of capital expenditure over the next six years to add an additional 100 billion pieces of capacity.
Economist Yeah Kim Leng of Sunway University said if Top Glove succeeded in its listing, it would be able to tap into a wider international investor base.
“The company appears to be capitalising on strong global investor sentiments and its performance as a key beneficiary of the Covid-19 pandemic as well as the world’s largest glove manufacturer,” he said.
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However, the firm said it was working to improve its operations and expected to resolve the issues by year-end.
“We believe it will be settled very soon,” said Lim during the online briefing. “We estimate it to be before the end of the year. We believe within a month, it should be settled; but this is a mere estimate.”
In 2006, Top Glove was fined 11 million ringgit (US$2.6 million) for immigration offences, while in 2018, reports surfaced that its workers were being forced to work overtime and charged exorbitant recruitment fees for work visas, a claim the company strenuously denied.
It was also previously fined for breaching social distancing rules and providing cramped conditions in its living quarters for workers.
About 20 Malaysia-domiciled companies are listed on the Hong Kong bourse, with HKEX an attractive prospect for successful corporations due to its active market trades and much higher daily turnover than the KLSE.
Additional reporting by Reuters
