KUALA LUMPUR: Top Glove Corporation Bhd's utilisation rates will remain low in the coming months as glove buyers have yet to deplete their inventories fully.
Hong Leong Investment Bank Bhd (HLIB Research) said the glove maker is also not entirely out of the woods given the persistent demand-supply imbalance.
The bank-backed research house said any potential price adjustments in the near future are also expected to be marginal, mainly to share part of the higher costs rather than a positive signal of improving the operating environment.
Meanwhile, HLIB Research said Top Glove's fourth quarter (Q4) financial year 2022 (FY22) net profit of RM175.2 million has come in below its and consensus estimates, at 63 per cent and 58 per cent, respectively.
"The negative deviation to our forecast was mainly due to a higher-than-expected cost of sales.
"We cut our earnings forecast for FY23-FY24 by 18-52 per cent, as we lowered our utilisation rates assumption for FY23-FY24 to 55 per cent and 75 per cent.
"We reiterate a 'Sell' call on Top Glove with a lower target price of 54 sen from 83 sen previously," it added.