RM27.65b market cap evaporates as investors flee from glove stocks

RM27.65b market cap evaporates as investors flee from glove stocks
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KUALA LUMPUR (March 2): Selling pressure on the glove stocks has yet to dry up, wiping off market capitalisation of RM27.65 billion from the big four manufacturers, namely Top Glove Corp Bhd, Hartalega Holdings Bhd, Supermax Corp Bhd and Kossan Rubber Industries Bhd.

The selldown has intensified since last Monday (Feb 22) as reflected by the loss of RM20.57 billion in market value among the big four glove makers based on their closing prices on Tuesday.

Malacca Securities Sdn Bhd head of research Loui Low told The Edge that the selldown was due to the news flow on vaccinations over the past two weeks.

According to him, the stocks have been oversold and bargain hunting activities have emerged.

"We believe [the stocks have] priced in the short-term vaccine impact. However, the rebound might be short-lived [based on the reading of the technical charts]," he added.

Top Glove closed at RM4.75 — the lowest level since June last year. The share price of the world's biggest glove maker has tumbled 22% since the start of the year. The fall from its peak of RM9.36 is even more drastic at 49%.

Top Glove will release its quarterly earnings next Tuesday (March 9). Its quarterly earnings will be closely watched. Any pleasant surprise will aid the sentiment on glove stocks, generally. Likewise, any disappointment on the earnings figures may spark further selling.

Top Glove is expected to declare a special dividend on top of the regular dividend based on its 50% payout ratio policy. The company will be declaring a special dividend of 20% for the remaining financial quarters in the financial year ending Aug 31, 2021 (FY21).

Supermax is the second worst performing glove stock on Bursa Malaysia after Comfort Gloves Bhd. Supermax's share price has shaved 32% year to date, shrinking its market capitalisation to RM11.18 billion. Although it is a KLCI component stock, Supermax is ranked 36th in terms of market value, overtaken by Inari Amertron Bhd, whose market cap stands at RM12.2 billion based on its closing price of RM3.70.

Kossan's share price has fallen the least so far, down by 16% year to date. Meanwhile, Hartalega's share price has shed 22% year to date to a 10-month low of RM9.41. The nitrile glove giant has indeed more than halved from its record high level of RM20.26.

Kathy Fong