Rubber glove makers among top decliners on Bursa

Rubber glove makers among top decliners on Bursa
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KUALA LUMPUR (Aug 3): Rubber glove manufacturers were among the top decliners on the local bourse today, continuing to trend downwards since touching their respective peaks in 2020 amid the Covid-19 pandemic.

At 12.04pm, Hartalega Holdings Bhd was the second top decliner by value on the bourse, declining 33 sen or 4.7% to RM6.70, its lowest since March 2020, with a total six million shares traded.

Top Glove Corp Bhd fell 14 sen or 3.6% to RM3.78, followed by Kossan Rubber Industries Bhd, which was down 12 sen or 3.6% at RM3.21, and Supermax Corp Bhd, which declined eight sen or 2.5% to RM3.12.

Share prices of the rubber glove players began rallying in May 2020 amid the outbreak and spread of Covid-19, which drove global demand for personal protective equipment (PPE) such as rubber gloves, translating into bumper profits for the companies, as well as small players such as Rubberex Corp (M) Bhd and Comfort Gloves Bhd.

However, the stellar quarterly earnings figures seemingly failed to whet investors’ appetite for glove stocks despite fresh waves of Covid-19 infections globally.

Analysts even put in lower earnings forecasts for these companies from 2022 onwards, indicating that the second half of 2021 (2H21) could be the last leg of fast growth and supernormal profits for the glove makers.

For example, analysts expect Top Glove, the world's largest rubber glove maker, to post a net profit of RM8.91 billion for the financial year ending Aug 31, 2021 (FY21), according to Bloomberg data, a 376% year-on-year (y-o-y) jump from RM1.87 billion the year before.

Beyond 2022, however, valuations of the group look vastly different as Top Glove is projected to post RM3.73 billion in net profit for FY22, a 58% y-o-y drop from the earnings forecast for the preceding financial year.

This would translate into earnings per share (EPS) of 44 sen for FY22, versus estimated EPS of RM1.09 for FY21, based on projections.

Surin Murugiah