By LYDIA NATHAN & S BIRRUNTHA / Pic MUHD AMIN NAHARUL
RUBBER glove stocks rallied on Bursa Malaysia yesterday as profit-seeking investors took advantage of low valuations and the resurgence of Covid-19 infections in Europe due to delays in vaccinations.
World’s biggest glove manufacturer Top Glove Corp Bhd rose some 10% or 49 sen to RM5.40, while Hartalega Holdings Bhd rose 9.6% or 89 sen to RM10.14. Supermax Corp Bhd rose 20.8% to RM4.87 as Kossan Rubber Industries Bhd added 30 sen or 8.9% to RM3.66.
“There are concerns from people on the potential side effects of the vaccines which may cause them to delay getting vaccinated,” Bank Islam Malaysia Bhd economist Adam Mohamed Rahim told The Malaysian Reserve.
Glove stocks have been losing share value since vaccines were announced last year, while the National Covid-19 Immunisation Programme rolled out at the end of February 2021 added to the sell-off as analysts cut their average target prices by as much as 51%.
Adam added that there is still significant value in local glove players, as the time for the globe to reach herd immunity could take years, which translates to sustained high demand from the healthcare industry for gloves.
Any hiccups in the distribution of vaccines or any form of newly discovered mutation could prevent glovemakers from any further drop and help it secure its players, he added.
Smaller glovemakers were not left behind as Comfort Gloves Bhd rose 31 sen or 15% to RM2.36.
Adam said even with the global supply of gloves expected to increase this year, there will be a shortage of 12.4 billion pieces in 2021.
Malacca Securities Sdn Bhd head of research Loui Low said as Covid cases are still on the rise globally, demand for gloves is unlikely to deflate anytime soon, with the counters giving investors both value and a good dividend.
“The glovemakers have been oversold because of a lack of fresh catalysts, but we saw overseas funds use the sell-off in Malaysian glovemakers to return and help boost confidence among more investors to buy in,” he said.
He added that the “value plus dividends offer” has put a floor to the price of glovemakers for the moment, while the vaccine rollout will ensure demand remains good.
Meanwhile, Top Glove clarified it can ship gloves produced from its manufacturing plants outside Malaysia to the US.
The glovemaker was prohibited from exporting gloves to the US on alleged forced labour issues.
Its MD Datuk Lee Kim Meow said the group hopes the US authorities can expedite the process of approval of the Certificate For Accommodation after it sent the application to the relevant parties, adding that Top Glove has complied with the Workers’ Minimum Standards of Housing and Amenities Act 1990 (Act 446), which involves the issue of workers accommodations.
He noted that the group remains highly committed to ensuring the wellbeing, health, working conditions and high standards of the accommodation of its workforce.
“We are also working to resolve the withhold release order issue as soon as possible,” he said in a press conference yesterday.
Lee said the company has engaged the US Customs and Border Protection (CBP) which has found no new additional issues on forced labour, but there are some additional rectification works on the existing findings, which are being addressed.
On March 29, the CBP announced it was directing its personnel at all US ports of entry to begin seizing disposable gloves produced by Top Glove.
The decision came after the CBP Office of Trade, in consultation with the Secretary of the Treasury, published a forced labour finding against disposable gloves produced by the group.
Top Glove said it will continue to work with the relevant ministry and government agencies, which are looking into strengthening existing regulation and related standard operating procedures for the manufacturing and construction sectors, to continuously enhance the workplace and living conditions of workers in Malaysia.