KUALA LUMPUR (Feb 9): Glove stocks were among the top losers in morning trade on Bursa Malaysia on Wednesday (Feb 9), despite the resurgence of Covid-19 cases and the spread of the Omicron variant globally, with average selling prices (ASPs) of gloves expected to continue trending lower.
As at 9.45am, the Health Care Index, which also tracks share prices of hospital operators and pharmaceutical companies, had fallen 18.4 points or 0.83% to 2,187.31.
Hartalega Holdings Bhd, which reported a 74.6% decline in profit for the third quarter ended Dec 31, 2021 (3QFY22), led the top losers with its share price slipping 5.03% or 28 sen to RM5.29 with a market capitalisation of RM18.1 billion. The stock had dropped 57.54% from RM12.46 in the past one year.
The glove maker's 3QFY22 net profit slumped to RM259.06 million from RM1 billion a year ago after a record-breaking run of higher ASPs for its gloves throughout the pandemic.
Revenue for the quarter under review dropped 52.8% to RM1.01 billion from RM2.13 billion a year prior due to the normalisation of ASPs and sales volume as demand dipped amid an increase in supply by major and new glove entrants.
For the cumulative nine months ended Dec 31, 2021 (9MFY22), net profit soared 94.3% to RM3.46 billion from RM1.77 billion, while revenue jumped 57.4% to RM6.92 billion from RM4.4 billion for the same period last year.
MIDF Research, one of the research houses covering the stock, said Hartalega’s 9MFY22 net profit was above the research house's and consensus expectations at 96.1% and 97.1% of respective full-year estimates.
However, it downgraded the stock to "neutral" from "buy" previously, with a revised target price of RM5.88 (from RM8.03).
“This is based on a PER (price-earnings ratio) of 21 times, which is its two-year historical average pegged at revised FY23F EPS (earnings per share) of 28 sen. Key risks to our call include: i) a faster decline in ASPs than expected; and ii) adverse FX (foreign exchange) movements.
“The group has guided that the prosperity tax adjustment would have an impact on earnings for the next quarter. However, the loss in earnings is forecast to be mitigated by the stabilisation of nitrile rubber glove ASPs in the coming months.
“We revise our earnings estimates for FY23 to reflect higher social compliance cost and conversion cost of raw materials as highlighted by the management,” said MIDF Research in a note on Wednesday.
Second top loser Top Glove Corp Bhd, meanwhile, slipped 2.62% to RM2.23 in morning trade, giving it a market value of RM18.3 billion. The stock had declined by 63.87% in the past one year.
Careplus Group Bhd was down by 2.06% or two sen at 95 sen, valuing it at RM539.67 million, with some 3.64 million shares done at the time of writing.
Kossan Rubber Industries Bhd dived 3.28% or six sen to RM1.77, with some 2.55 million shares traded. This gave the group a market value of RM4.53 billion.
Supermax Corp Bhd fell 2.4% or three sen to RM1.22, with a market capitalisation of RM3.32 billion. The company announced on Tuesday that it had expanded its remediation plan to include former direct hire and contract workers who left the company before Oct 1, 2019, and that it had rolled out a new and comprehensive policy to strengthen its human resources management and migrant worker policies and practices.
Across the country, daily Covid-19 cases breached the 13,000 mark for the first time in about five months to 13,944 on Tuesday, from 11,034 on Monday, due to the spread of the Omicron variant.
The last time the nation reported over 13,000 new infections was on Sept 26, 2021, when the number stood at 13,104.
The latest figures raised Malaysia’s total confirmed coronavirus infections to 2,939,198.