Top Glove triple listing bid is a stretch
03/03/2021 01:56
(The author is a Reuters Breakingviews columnist. The opinions
expressed are her own.)
By Jennifer Hughes
HONG KONG, March 3 (Reuters Breakingviews) - Two stock
market listings are more than enough for most companies.
Malaysia’s Top Glove TPGC.KL TOPG.SI , the world’s largest
rubber-handwear maker is planning to add a primary one in Hong
Kong in addition to its main trading venue in Kuala Lumpur and
its secondary one in Singapore. Firms with small home markets
must often move to grow but few can juggle the complexities of
three bourses.
Thirty-year-old Top Glove vaulted into global investor
consciousness last year as a popular pandemic play and its
shares leapt six-fold. They peaked in October since when they
have halved as the vaccine rollout began and as the company
faced criticism of its labour practices and governance from
BlackRock BLK.N among others. Now it plans to sell up to 1.5
billion new shares in Hong Kong, raising $1.9 billion at its
Feb. 26 closing price when it filed its application.
The importance to $10 billion Top Glove of making a splash
is clear since it doesn’t need to raise equity. It has earmarked
most of the funds for expansion, but a quarter alone could have
been covered from the upsized full-year dividend it announced in
January, per Breakingviews calculations. What’s more, it has net
cash to hand and its shares currently trade on just six times
its expected 12-month earnings, against a 10-year average
multiple of 18. Diluting its existing shareholders by almost one
fifth carries a cost too.
Companies with multiple listings often spur activists to
question the efficiency of such convoluted structures. Consider
the pressure on Anglo-Australian miner BHP BHPB.L BHP.AX
from hedge fund Elliott. Even so, those like Top Glove based in
smallish markets often feel they need to move to tap bigger
capital pools if they want to grow. In this case, investors must
hope it will drop its Singapore presence over time. Responsible
for less than a tenth of turnover now, it offers lower liquidity
than a successful listing in the far-bigger Hong Kong market.
Before then Top Glove has to run the gauntlet of three sets of
rules and filings while addressing its labour force issues and
coping with fluctuations in demand for its products. That’s a
stretch for any company.
On Twitter https://twitter.com/JennHughes13
CONTEXT NEWS
- Malaysia’s Top Glove filed on Feb. 26 for a primary share
listing in Hong Kong in addition to its existing one in Kuala
Lumpur and a secondary listing in Singapore. The rubber glove
producing giant said it could sell up to 1.5 billion shares,
which at its closing price on Feb. 26 in Kuala Lumpur, would
raise the equivalent of $1.9 billion.
- For previous columns by the author, Reuters customers can
click on HUGHES/
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Malaysia's Top Glove plans to raise $1.9 bln through Hong Kong
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BREAKINGVIEWS-Rubber-glove selloff gets out of hand
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(Editing by Una Galani and Katrina Hamlin)
((jennifer.hughes@thomsonreuters.com; Reuters Messaging:
jennifer.hughes.thomsonreuters.com@reuters.net))