KUALA LUMPUR (Aug 12): A total of RM31.18 billion in market capitalisation was wiped off across seven glove manufacturers on Bursa Malaysia since the beginning of the year.
Top Glove Corp Bhd — which has retreated 67% year-to-date — saw the biggest drop in market cap, with RM13.89 billion evaporated since the beginning of the year.
This was followed by Hartalega Holdings Bhd, which saw a RM12.75 billion decline in total value, as its share price retreated by 65.1% year-to-date.
Meanwhile, from the height of the pandemic in December 2020, the seven glove counters collectively registered a fall of RM101.31 billion in their market capitalisation.
Top Glove lost RM42.25 billion in value since December 2020, while Hartalega's market value came down by RM34.78 billion.
Glove stocks in red, Top Glove closes below 90 sen
Shares in major glove makers such as Top Glove, Hartalega and Supermax Corp Bhd retreated on Friday (Aug 12) as the healthcare index on Bursa Malaysia slipped into the red.
Top Glove, the world’s largest glove producer, was the most actively traded counter on the local bourse while its share price dropped below 90 sen.
The stock opened unchanged at 92.5 sen before it started falling to as low as 85 sen. It closed the day seven sen or 7.57% lower at 85.5 sen, giving it a market capitalisation of RM7.02 billion. The counter saw 121.6 million shares changed hands.
Hartalega extended its loss and drifted further into the negative territory, closing 28 sen or 12.28% lower at RM2, valuing the group at RM6.86 billion.
Supermax closed three sen or 3.68% lower at 78.5 sen, giving it a market value of RM2.14 billion.
Kossan Rubber Industries Bhd finished 10 sen or 8.55% lower at RM1.07, valuing the group at RM2.74 billion.
KL Healthcare Index — which tracks the performance of healthcare related stocks — closed 43.15 points lower at 1,607.44.
Declining ASPs prompt analysts to slash glove manufacturers’ target price
On the earnings front, declining average selling prices (ASPs) for gloves, increase in vaccination and the opening of international borders and economic activities have taken a toll on the glove manufacturers.
On Aug 10, Hong Leong Investment Bank (HLIB) cautioned that Hartalega could be at risk of being removed from the FBM KLCI in the upcoming semi-annual review should its share price deteriorate further.
Hartalega recently announced that its first quarter net profit slumped to RM88.28 million, from RM2.26 billion a year earlier, as its revenue dropped significantly at a time when ASPs and sales volume declined, after rising to record highs during the crucial period of the Covid-19 outbreak, which began in early 2020.
Quarterly revenue dropped to RM845.67 million, from RM3.9 billion a year earlier.
A check on Bloomberg showed that 15 analysts have "sell" calls on Top Glove, versus seven with "hold" calls and one with a "buy" call.
The target price set for the world’s largest glove manufacturer ranges between 65 sen and RM3.30, for an average price of RM1.83.
For Hartalega, 11 analysts have issued "sell" calls, compared with eight with "hold" calls and two with "buy" calls.
The average target price for Hartalega is RM2.19, with the highest price set at RM5.80 and lowest at RM1.86, based on data from Bloomberg.