WHETHER it is a matter of coincidence or purposely intended, Top Glove Corp Bhd’s pledge to commit itself to the “20% special dividend above a 50% dividend policy” has surely slowed the bleed as the Big Four glove makers succumbed to yet another round of bloodbath.
“In consideration of the good profit performance and strong cash flow, and to reward its shareholders, the board of Top Glove has committed to a special dividend of 20%, in addition to its existing dividend policy of a 50% dividend pay-out ratio on PATAMI for the second, third and fourth quarter of FY2021,” read the company’s latest Bursa Malaysia filing.
“The total 70% dividend pay-out ratio on PATAMI (profit after tax and minority interests) will commence from the second quarter of FY2021.”
At the close of today’s trading, Top Glove shed 62 sen or 10.13% to RM5.50 with 347.86 million shares exchanged hands, thus valuing the company at RM45.1 bil.
The world’s biggest glove maker occupied top spot as the day’s most active stock and second spot in the top losers list after trading between an intra-day high of RM6.11 and an intra-day low of RM5.23.
On the broader market, the FBM KLCI slumped 24.64 points or 1.51% to 1,602.57 with losers thumping gainers by 701 to 407.
Hartalega Holdings Bhd which was the day’s biggest loser dipped RM1.66 or 13.67% to RM10.48 with 37.8 million shares traded while Kossan Rubber Industries Bhd which ranked the day’s third biggest loser edged down 56 sen or 12.44% to RM3.94 with a volume of 49.64 million shares.
Supermax Corp Bhd completed the glove stock rout on the fourth spot by retreating 50 sen or 8.32% to RM5.51 with 63.54 million shares traded.
Minority Shareholder Watch Group (MSWG) CEO Devanesan Evanson opined that Top Glove’s latest announcement will augur well for minority shareholders who prefer dividend yield stocks.
“This announcement will certainly add to their confidence. There has been a routing of all the large glove stocks today and the announcement will certainly mitigate the fall in Top Glove’s share price,” he told FocusM.
Asked if Top Glove was pressured to issue such a commitment in view of the massive sell-off that took place, Devanesan said: “It is unlikely that Top Glove will not honour the commitment. We have to give them the benefit of the doubt.”
Nevertheless, the MSWG head honcho deemed Top Glove’s announcement as a smart move to arrest sell orders of its stocks to some extent.
“Investors who may have been thinking of selling their shares due to the rout on Top Glove shares may now not do so due to the committed increased dividend yield,” he suggested.
“What makes it more attractive is that the increased dividend will be paid on a quarterly basis for the current year. There is a sense of immediacy of cash flow for the investors.”
Perhaps, this is after all a better move if pitted against company share buyback exercise (or even personal share acquisition) which Top Glove is so prone of embarking upon. – Jan 4, 2021
