Glove share prices are expected to be slightly higher today on the good momentum
by RAHIMI YUNUS / pic by TMR FILE
SELLING pressure on glove stocks appears to have eased with the news of a highly effective vaccine by Moderna Inc and the tightened movement restrictions at Top Glove Corp Bhd’s workers’ dormitories doing little to investor confidence in the counters.
In a market of two halves yesterday, early losses in intraday trading that wiped off close to RM10 billion in market value of the seven major listed rubber glove producers, was met with fresh buying in the afternoon session with most of the stocks ending in the green with the exception of Top Glove which fell 20 sen to close at RM7 for the trading day.
“I think, for now, investors have priced in the vaccine news and another company making an announcement should not affect the market too much. Moving forward, I think this is a good time for recovery from the lowest point seen yesterday. It would be interesting to see gloves rebounding in the next few days,” Malacca Securities Sdn Bhd head of research Loui Low told The Malaysian Reserve (TMR).
All seven biggest glove counters on Bursa Malaysia opened lower yesterday following the Enhanced Movement Control Order (EMCO) rule on Top Glove’s workers’ premise in Klang, Selangor, which started yesterday for 14 days.
Top Glove slipped to RM6.60 at the opening yesterday and continued to decline to RM6.15 before recovering to RM7 at the end of the trading session, which was 2.78% lower than the previous close.
Other glove counters closed at a mixed territory with Hartalega Holdings Bhd and Comfort Gloves Bhd gaining 0.97% to RM14.64 and 1.06% to RM3.83 respectively, while Kossan Rubber Industries Bhd lost 0.16% to RM6.25 and Supermax Corp Bhd stayed flat at RM8.
Malaysia’s Healthcare Index rose sharply 9.91 points or 0.25% to close at 3,899.57 yesterday.
Low said glove share prices are expected to be slightly higher today on the good momentum though it may not push towards an uptrend just yet unless a certain level is breached.
He said Top Glove needs to close at RM7.90 to be in an uptrend position or else a short-term rebound is considered.
Trading volume of gloves stocks inched higher due to the fresh buying as the overall market volume of 16.4 billion securities yesterday was driven by trading in penny stocks.
Top Glove clarified the 14 days of EMCO imposed on its workers’ hostel in Klang, Selangor, would affect 5,700 employees instead of 13,190 as previously reported.
The country’s biggest glovemaker said the 5,700 workers represent about 27% of its total employees of 21,000.
“Our factories in Meru, Klang, continue to operate with reduced capacity and workers not under EMCO are working under strict standard operating procedures in alignment with guidelines from the Ministry of Health,” the company said in a statement yesterday.
It said the majority of the affected workers are asymptomatic and do not have symptoms such as fever or any sickness.
CGS-CIMB Research analyst Walter Aw said — assuming that all 2,500 workers (15.6% of Top Glove’s total workforce of 16,000 and 31.2% of its estimate of the number of Top Glove workers in the Klang area) are not allowed to work for two weeks — up to 15% of the group’s total production capacity will be affected.
As a result, based on the initial estimates, the analyst said the research projected the impact to Top Glove’s financial year 2021 revenue and net profit forecasts at -0.6% and -0.9% respectively.
He added that Top Glove does not expect any cancellation of orders or any penalty payments to its customers owing to late delivery of orders as a result of the EMCO.
Based on its estimates, Top Glove has a total of 16,000 workers, with 8,000 workers working in its factories in Klang.
Top Glove’s factories are estimated to contribute up to 50% of its total current production capacity of 90 billion pieces per annum.