For a moment, Lim Wee Chai’s ascent looked unstoppable.
His Top Glove Corp. grew bigger than Malaysia’s banks, telecommunication firms and even the state-owned electricity company during the Covid-19 pandemic. Its stock price soared 450% through the first seven months of 2020, leaving high-flyers like Moderna Inc., Zoom Video Communications Inc., Peloton Interactive Inc. and Carvana Co. in the dust and making Lim a billionaire several times over.
The maker of one out of every four gloves in the world said in September 2020 it expected “fresh highs” after profit surged 1,500%. By June 2021, as vaccines rolled out across the globe and more competitors entered the market, that guidance shifted to a gradual decline in selling prices. The company vowed six months later to press forward with an expansion, undeterred by its stock tumbling back to pre-Covid levels.
All the while, the value of Lim and his family’s stake in Top Glove slipped: From US$6 billion ($8.41 billion) at its peak in October 2020, to US$4.5 billion four months later, to US$1.6 billion in January.
Then last month came the final blow: a 99% plunge in Top Glove’s profit, enough to put those expansion plans on hold. The results are “almost close to the bottom,” Lim said. The value of the stake is down to US$1 billion now, according to the Bloomberg Billionaires Index.
Lim is hardly the only founder whose fortune skyrocketed during the pandemic and has since come back to Earth. The period minted at least five billionaires in the protective-gear sector alone, including Thai Kim Sim of Supermax Corp., which surged at an even faster pace than Top Glove, not to mention scores of newly rich tech executives and cryptocurrency holders.
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But as the chairman of the biggest maker of rubber gloves, the erosion of Lim’s fortune is shaping up to be as dramatic as its rise. And unlike US or European tech founders and crypto traders, Top Glove’s rapid fall could deal a blow to Malaysia, which produces 65% of the world’s supply of gloves. While the nation’s shipments of rubber items surged 50% to almost US$14 billion last year, Chinese competitors have been ramping up production, making the reversal even more severe.
“What surprises us is the faster-than-expected decline in average selling price and the aggressiveness of Chinese glovemakers in terms of their willingness to cut the price in order to grab market share,” said Wong Wei Sum, an analyst with Maybank Investment Bank Bhd.
A Top Glove representative didn’t comment for this story.
Lim started Top Glove in 1991 and turned it into a behemoth that churns 100 billion pieces of gloves annually from 49 factories, supplying 26% of the global market for the protective gear. The stock started trading in Malaysia in 2001 and in Singapore 15 years later. A third listing in Hong Kong was put on hold in March due to “changing developments in the industry.”
Lim, who owns 36% of Top Glove with his family, has been the main beneficiary of the company’s dividend policy and last year’s record payout. Even though shares are down 89% from their peak, he received a windfall of more than $400 million for 2021 and $75 million in 2020 as profit grew more than 300% each year. That compares with $26 million in 2019, before the pandemic.
It’s unlikely 2022 will be as good to him as his days as a multibillionaire.
“Its 2021 financial year was an extraordinary year as it was at the peak of Covid-19 pandemic, where gloves were essential items,” said Lim Su Hua, an analyst with JF Apex Securities Bhd. The outlook for Top Glove is “in the doldrums in the near term,” she added.
