Rubber glove manufacturers fall on bearish report from JP Morgan

Rubber glove manufacturers fall on bearish report from JP Morgan
-A +A

KUALA LUMPUR (Jan 14): The rubber glove manufacturers saw declines in their share prices today after another bearish report from JP Morgan on the average selling price of rubber gloves going forward, as demand is expected to peak.

In a recent note, JP Morgan said gloves are “not needed” while administering vaccinations and that demand for gloves will continue to ease, contrasting with the consensus expectation that demand for disposable gloves will not shrink as sharply.

At 12.30pm, Top Glove Corp Bhd declined 27 sen or 4.1% to RM6.36, with some 27.9 million shares done.

Hartalega Holdings Bhd fell 64 sen or 4.9% to RM12.36, with some 3.9 million shares traded.

Kossan Rubber Industries Bhd fell 25 sen or 5.6% to RM4.23, with 9.8 million shares transacted.

Supermax Corp Bhd fell 40 sen or 5.6% to RM6.71, with some 20.6 million shares traded.

The counters were among the top losers by value on Bursa Malaysia.

The smaller rubber glove players were also among the decliners, with Comfort Gloves Bhd, Careplus Group Bhd and Adventa Bhd down 6.8%, 3.2% and 6.2% respectively.

JP Morgan, which initiated coverage on the Malaysian rubber glove sector with “sell” calls in December, cited the Centers for Disease Control and Prevention of the US, the National Health Service of the UK and the British Columbia Centre for Disease Control of Canada in saying that gloves are not required while carrying out vaccination.

The American bank also stressed that glove prices may have peaked as testing efforts have started to plateau in most countries, especially developed ones. The bank pointed out that the current strong demand was due mainly to high testing activities globally.

The anticipated slower demand, it said, implies limited upside to the average selling prices of rubber gloves.

JP Morgan maintained “underweight” calls on Top Glove (TP: RM3.50), Hartalega (TP: RM8.50) and Kossan (TP: RM3.80).

Read also: 
Glove bear JP Morgan tells clients gloves ain’t needed during vaccinations

Surin Murugiah