Regarding Top Glove share buybacks.

The Smart Investors wrote:

• What do you think of Topglove's share buy back scheme. Seems every few days they buy back their shares. But doesnt seem to be affecting share price. As a company i really like Topglove and have taken their share buy back as a positive signal. Juz wondering what your thoughts on it might be.

Dear Smart Investor.

Here are some of my thoughts on this issue. (Do realise I am not a legal investment advisor, so do take my comments with a pinch of 'garam'. )

1. Regarding TopGlove share buyback.

In my opinion, I'm not too impressed with their share buyback program. I could be wrong but I do not see much point in initiating a share buyback based on the current prices for I do not see much value in doing so and I would certainly question why the need for it. Perhaps money could be utilised much better.

For starters, Top Glove's cash flow is weak and if you look at their recent announced quarterly earnings, you would see that their cash balances is much weaker if you compared to the previous year.

And amidst their rather insane everlasting global capital expansion (yes, I am not a fan of their continuous expansion over all these years.) Top Glove is a company which is in a nett debt position. And when you have more debts than cash, I am simply not in favour of such a corporate exercise.

2. Buybacks not affecting the share price.

Not all buybacks works. Some fail. Do read Dali's truly brilliant article on Why buybacks fail.

Hence, I ask you in return. Are you really expecting the share price to increase?

3. Regarding Top Glove.

I have posted before quite a number of postings on Top Glove ( See this posting: Top Of Ze World: VIII. It include links to other Top Glove postings) and I am sorry but I am not a fan of this company and I do see some valid reasons to be sceptical. For example, I seriously believe Top Glove has over-expanded and I am sceptical if the company can truly manage their expansions in a profitable manner. And then you have the rising costs issue. Rising fuel and high rubber prices simply means higher cost. And last but not least, I could be wrong but Top Glove's sales are predominantly in the US Dollar. And a shrinking US Dollar will have a huge impact on Top Glove profitability.

Hope my thoughts help as a second opinion.

rgds