KUALA LUMPUR (Feb 7): Share prices of rubber glove makers climbed on Monday (Feb 7) morning, led by Top Glove Bhd in terms of percentage gain, as the new wave of Omicron worldwide spurred renewed interest in healthcare counters.
Top Glove, which was among the top gainers, rose as much as 29 sen or 13.36% to RM2.46. At noon break, it settled at RM2.45, still up 28 sen or 12.9%. The counter, which was also among the most actively traded stocks, saw 42.42 million shares traded.
Hartelaga Holdings Bhd was also among the top gainers. The stock climbed as much as 37 sen or 6.61% to RM5.97. The counter pared some gains at noon break, still up 29 sen or 5.18%.
Supermax Corporation Bhd and Kossan Rubber Industries Bhd were also on the rise. At noon break, Supermax gained eight sen or 6.35% at RM1.34, while Kossan advanced nine sen or 4.92% at RM1.92.
Their smaller peers Careplus Group Bhd, Comfort Gloves Bhd and Rubberex Corp (M) Bhd also saw buying interest. Careplus grew 9.5 sen or 10.05% to RM1.04; Comfort Gloves increased by 6.5 sen or 6.74% to RM1.03; Rubberex went up 2.5 sen or 5% to 53 sen.
Fortress Capital Asset Management chief executive officer (CEO) Thomas Yong said the new wave of Omicron globally has raised expectations that the elevated demand for gloves will sustain longer than initially anticipated.
“Concerns, however, remain on the sustainability of global demand, margin compression from lower selling prices and difficult determination of fair valuation,” he told theedgemarkets.com.
Meanwhile, Areca Capital Sdn Bhd CEO Danny Wong said the uptrend in glove stocks on Monday was due to the rapid increase in daily Covid-19 cases in Malaysia over the past two to three days.
“As daily Covid-19 cases breach 10,000 now, short-term traders and retailers are taking this as the good news for the gloves,” he told theedgemarkets.com.
Despite the new Omicron wave, he is not reconsidering glove stocks as over the past two quarters, the glove companies' quarterly results showed a downtrend in average selling price (ASP) and revenue.
He also noted Covid-19, which will soon become an endemic, may not drive the glove ASP higher, and the catching up of glove supply in other countries may drag glove ASP.
Malacca Securities Sdn Bhd senior analyst Kenneth Leong also opined that the rise in glove stocks was a reaction to the rising cases of Omicron in Malaysia and other countries.
“Over the near term, the glove stocks are expected to continue to recover, but the recovery may not be sustainable over the long term, because the current ASP for gloves [is] still on the [downtrend],” he told theedgemarkets.com.
He does not think the long-term investors should reconsider glove stocks now because gloves players' earnings are still on the downtrend due to lower ASP and higher competition from new glove players in China.
Rakuten Trade head of research Kenny Yee said the uptrend in glove stocks on Monday was just a knee-jerk reaction towards the recent spike in Covid-19 cases, thus he advised investors not to be overzealous.
“I do not think the uptrend is sustainable,” he told theedgemarkets.com.
Reuters reported last Friday that US coronavirus deaths surpass 900,000, driven in part by Omicron surge.
According to the media report, the latest tally marks an increase of more than 100,000 US Covid-19 fatalities since Dec 12, coinciding with a surge of infections and hospitalisations driven by the highly contagious Omicron variant of the virus.
Back home, Malaysia reported 10,089 daily Covid-19 cases on Sunday, up from 9,117 the previous day — the highest level seen since Oct 2 last year (10,915 cases).
Health Minister Khairy Jamaluddin said Malaysia is now experiencing the full Omicron wave, with new cases expected to hit 15,000 soon amid the spread of the highly contagious coronavirus variant.