Friday 29 Mar 2024
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KUALA LUMPUR (Dec 16): At a glance, Bursa Malaysia's list of top gainers was littered with rubber glove manufacturers in morning trade today after the recent drop in their share prices. The share price rise today could be seen against value-trade dynamics as investors capitalised on Covid-19 vaccine-driven weakness in glove-related shares to buy these stocks in anticipation of still-robust global glove demand owing to the pandemic.

At 10.44am today, Hartalega Holdings Bhd had risen 60 sen or 5.01% to RM12.58, Top Glove Corp Bhd added 33 sen or 5.15% to RM6.74, Supermax Corp Bhd climbed 34 sen or 5.01% to RM7.13 and Kossan Rubber Industries Bhd was 25 sen or 5.1% higher at RM5.15.

"[It is] value trade at this juncture,” CGS-CIMB Securities Sdn Bhd analyst Walter Aw wrote in a note today.

Meanwhile, Hong Leong Investment Bank (HLIB) Research analyst Farah Diyana Kamaludin wrote in a note today share prices of glove players had seen weakness of late largely due to Covid-19 vaccine development news flows. 

"[But] with the global Covid-19 count still chalking new daily highs, we think the risk-to-reward ratio seems favourable [for the rubber glove sector] at current levels,” Farah Diyana said.

The impact of the glove share price rise on Bursa today was apparent on the broader market.

At 10.45am, Bursa’s Healthcare Index, which tracks share prices of companies including rubber glove manufacturers and pharmaceutical companies, had risen 1.65%, while the 30-stock FBM KLCI added 0.97%.

Top Glove and Hartalega are both KLCI constituents.

On the other hand, Aw said that owing to the Covid-19 pandemic, there is an acute shortage of rubber gloves globally due to increased usage in the medical field as well as in non-medical industries. 

"Though we expect mass roll-outs of Covid-19 vaccines in 2021, we believe the glove shortage will persist; glove makers [have] continued to highlight that their capacity is fully taken up until at least 1QCY22 (the first quarter of calendar year 2022). 

"Due to the supply shortage currently, we also gather that certain glove buyers are willing to lock in large volume orders at a premium to current average selling prices (ASPs) to ensure sufficient glove supply next year,” he said.

Meanwhile, Farah Diyana said HLIB is staying "overweight" on the Malaysian rubber glove sector.

She said Top Glove is HLIB’s top pick in the sector. 

Edited ByChong Jin Hun
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