Top Glove ups capex allocation to RM10b from RM8b

KUALA LUMPUR (Oct 8): Top Glove Corp Bhd has earmarked RM10 billion for capital expenditure (capex) over the next five financial years, a move which will see the company raising its annual production capacity to surpass 100 billion pieces of gloves as early as the current financial year ending Aug 31, 2021 (FY21) from 85.5 billion pieces in September 2020 as the Covid-19 pandemic generates demand for gloves.

According to notes in Top Glove’s latest investor presentation, the RM10 billion capex allocation for FY21 to FY25 will be invested in several key areas including new capacity, enhancement of existing manufacturing facilities, Industry 4.0 initiatives, a gamma sterilisation plant, land bank for future expansion, IT upgrades and workers’ facilities.

“Glove demand continues to be robust. RM10 billion capex for the next five years," the world’s largest rubber glove manufacturer by output volume said.

According to the company, its annual production capacity is expected to rise to 105 billion pieces of gloves in FY21 before climbing to 121 billion pieces in FY22.

Top Glove said 30% of production capacity has been allocated for spot glove orders as the company sees a monthly increasing trend for average selling prices following strong glove demand, as well as higher raw material and operating costs.

"Post Covid-19 with vaccine available, we expect glove usage to be stronger than pre-Covid-19 era due to increase in healthcare and hygiene awareness," it said.

Top Glove’s latest RM10 billion capex allocation update shows an increase from the RM8 billion reported earlier.

On Sept 17, 2020, news reports, quoting Top Glove, said the group had then earmarked RM8 billion for the next six financial years, from FY21 to FY26, during which the glove manufacturer is expected to see additional annual production capacity of 100 billion pieces of gloves.

According to notes in Top Glove’s latest investor presentation, the RM10 billion capex allocation for FY21 to FY25 is expected to result in additional annual production capacity of 100 billion pieces of gloves during the five financial years.

At 11.07am, Top Glove’s share price fell nine sen or 1.02% to RM8.71, bringing the company’s market value to about RM70.81 billion. The stock saw some 9.76 million shares traded.