The world’s largest rubber glove manufacturer, Top Glove, had an extraordinary year. It is one of the few companies that benefited from the COVID-19 pandemic as a result of increased demand for rubber gloves.
Its revenue and net profit increased by 50.7% and 380.6% year-on-year respectively in 2020. On a nine-month basis, revenue and net profit even surged by 246.2% and 1,163.1% year-on-year respectively in 2021. Despite its stellar financial performance, some of its management practices in the past year have caught my attention.
1. Share buybacks
The management embarked on a series of share buybacks after the company’s share price started losing steam in September 2020. The share price nosedived from RM9.60 — the highest closing price Top Glove has ever recorded since its IPO — to a 52-week low at RM3.40 in September 2021. This represents a drop of 64.6%. In terms of market capitalisation, about RM50 billion was wiped out from the market over the course of a year....