{"id":116082,"date":"2021-03-09T07:23:01","date_gmt":"2021-03-09T07:23:01","guid":{"rendered":"https:\/\/precoinnews.com\/?p=116082"},"modified":"2021-03-09T07:23:01","modified_gmt":"2021-03-09T07:23:01","slug":"malaysian-glove-makers-are-too-cheap-to-ignore-after-recent-fall-in-share-price-analyst-says","status":"publish","type":"post","link":"https:\/\/precoinnews.com\/markets\/malaysian-glove-makers-are-too-cheap-to-ignore-after-recent-fall-in-share-price-analyst-says\/","title":{"rendered":"Malaysian glove makers are &#x27;too cheap to ignore&#x27; after recent fall in share price, analyst says"},"content":{"rendered":"<ul>\n<li>Shares of Top Glove, the world&#x27;s largest rubber gloves producer, have fallen 17.7% this year as of Monday&#x27;s close. Its smaller peers Hartalega, Supermax and Kossan have dropped between 18% and 30%.<\/li>\n<li>Such declines are &quot;unjustified,&quot; said Ng Chi Hoong, an analyst at Malaysian investment bank Affin Hwang.<\/li>\n<li>Ng reiterated his &quot;overweight&quot; call on the sector and has a &quot;buy&quot; rating on the four stocks.<\/li>\n<\/ul>\n<p>SINGAPORE \u2014 The recent plunge in share prices of Malaysian rubber gloves makers is &quot;unjustified,&quot; said an analyst who&#x27;s predicting further upside for the stocks.<\/p>\n<p>Shares of Top Glove, the world&#x27;s largest rubber gloves producer, have fallen 17.7% this year as of Monday&#x27;s close. Its smaller peers Hartalega, Supermax and Kossan have dropped between 18% and 30%.<\/p>\n<p>In comparison, the benchmark FTSE Bursa Malaysia KLCI Index fell 0.9% in the same period.<\/p>\n<p>&quot;We are maintaining our Overweight call on the sector, as we believe the recent decline in share prices is unjustified,&quot; Ng Chi Hoong, an analyst at Malaysian investment bank Affin Hwang, wrote in a Monday report.<\/p>\n<p>The decline in Malaysian glove stocks followed a significant jump last year when the Covid-19 pandemic boosted demand for medical gloves.<\/p>\n<p>Factors hurting investor confidence in the stocks include a potential fall in selling prices of gloves on lower demand as more people are being vaccinated globally, said Ng.<\/p>\n<p>In addition, Top Glove&#x27;s plans to list in Hong Kong \u2014 its third stock listing after Malaysia and Singapore \u2014 also triggered worries that the company is raising funds in anticipation of a weaker outlook, he said.<\/p>\n<p>But those concerns will likely ease, said Ng. Here are his target prices for Malaysia&#x27;s glove stocks.<\/p>\n<h3>Affin Hwang&#x27;s target prices for Malaysian glove stocks<\/h3>\n<table>\n<thead class=\"BasicTable-tableHeading BasicTable-tableHeadingSortable\">\n<tr>\n<th class=\"BasicTable-textData\"><span>Stocks <span><\/span><\/span><\/th>\n<th class=\"BasicTable-numData\"><span>Monday&#x27;s close (Malaysian ringgit) <span><\/span><\/span><\/th>\n<th class=\"BasicTable-numData\"><span>Target price (Malaysian ringgit) <span><\/span><\/span><\/th>\n<th class=\"BasicTable-numData\"><span>Upside <span><\/span><\/span><\/th>\n<\/tr>\n<\/thead>\n<\/table>\n<h2>Demand to stay above pre-Covid levels<\/h2>\n<p>The analyst said the jump in average selling prices of gloves is not sustainable, and forecast a 30% to 35% fall in prices in 2022. Still, prices will likely remain above pre-pandemic levels for the next two to three years at least, he said.<\/p>\n<p>That&#x27;s partly because demand for gloves is expected to remain elevated in the coming years as the medical sector uses more personal protective equipment, said Ng.<\/p>\n<p>He added that he agreed with the report by consultancy Frost and Sullivan and commissioned by Top Glove, which projected demand for disposable gloves to increase by an average 15% annually for the next five years.<\/p>\n<p>Such growth in demand would come alongside a 20% annual increase in supply in the next few years, said Ng.<\/p>\n<h2>Top Glove plans to list in Hong Kong<\/h2>\n<p>Another development that has driven recent price actions in Malaysian glove stocks is Top Glove&#x27;s planned third listing in Hong Kong.<\/p>\n<p>The company said last month that it applied for a &quot;dual primary listing&quot; in Hong Kong that could raise up to 7.7 billion ringgit ($1.87 billion). It said it will keep its current primary listing in Malaysia and secondary listing in Singapore.<\/p>\n<p>Investors reacted negatively to the news on concerns that the additional listing would dilute Top Glove&#x27;s earnings per share.<\/p>\n<p>Still, Ng has maintained his &quot;buy&quot; rating for Top Glove and its Malaysian peers. He said the decline in share prices have brought valuations down to levels that are &quot;too cheap to ignore.&quot;<\/p>\n<p>The analyst added that compared with their international counterparts Malaysian glove makers are delivering higher dividend yield and better return on equity \u2014 a measure of financial performance.<\/p>\n<p>Top Glove on Tuesday reported a surge in quarterly profits to 2.87 billion ringgit ($695 million) for the three months ended February, from 115.68 million ringgit ($28.03 million) a year ago.<\/p>\n<p>The company said global demand for gloves continued to be &quot;strong,&quot; with the Covid pandemic spurring an increase in glove usage and heightened hygiene awareness.<\/p>\n<p>Source: <a href=\"https:\/\/www.cnbc.com\/2021\/03\/09\/investing-analyst-on-outlook-for-top-glove-malaysian-glove-stocks.html\" target=\"_blank\" rel=\"noopener\">Read Full Article<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Shares of Top Glove, the world&#x27;s largest<\/p>\n","protected":false},"author":3,"featured_media":116081,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[23054],"tags":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v21.7 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Malaysian glove makers are &#x27;too cheap to ignore&#x27; 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