This article first appeared in The Edge Financial Daily on April 6, 2018

KUALA LUMPUR: Shares in Comfort Gloves Bhd tumbled for a seventh day yesterday as investors reacted negatively to news the US Food and Drug Administration (FDA) has added the rubber glove maker on its alert list on March 15.

The stock dived 9.7% to an 11-month intraday low of 69.5 sen in early trade yesterday before paring some losses to close at 70 sen, still down 6.5 sen or 8.5% from Wednesday’s closing. It saw 27.58 million shares change hands and was one of the most actively traded stock on Bursa Malaysia.

Since March 28, the group has lost RM236.02 million in market value.

A check on the FDA’s website revealed that the regulator has put Comfort Gloves’ wholly-owned subsidiary Comfort Rubber Gloves Industries Sdn Bhd on its alert list, with six of its products flagged.

When contacted yesterday, Comfort Gloves executive director Sean Cheang Kar Seng declined to comment on the matter.

SJ Securities Sdn Bhd senior remisier Goh Kay Chong told The Edge Financial Daily that Comfort Gloves’ glove shipments to the US are unlikely to be detained unless the group can present evidence that the shipments are not adulterated.

“If Comfort Gloves cannot present evidence, its business will be affected and that explained the drop in its share price,” he said.

According to the group’s annual report for the financial year ended Jan 31, 2017, 42.51% of Comfort Gloves’ RM262.99 million revenue was derived from the US, which is also its biggest market.

According to Bloomberg data, RHB Research Institute is the only research house that covers Comfort Gloves. The research house downgraded its rating on the stock to “neutral” yesterday from “buy”. It has also cut its target price to 68 sen from RM1.46 previously.

This is not the first time a Malaysian glove maker has attracted the FDA’s attention.

In 2016, the FDA imposed a ban on the use of powdered medical gloves in the healthcare sector, saying they pose a risk to patients and healthcare providers.

Back then, both the Malaysian Rubber Glove Manufacturers Association (Margma) and the Malaysian Rubber Export Promotion Council had objected to the ruling.

Nevertheless, Margma president Denis Low had come out to say that there was no loss to Malaysian rubber glove manufacturers after the ruling as the quantum of exported latex powdered gloves to the US was negligible.