Top Glove, Kossan Rubber can each rise by about 75%, Fais says
Analyst says lead time up to 12 months vs 1-2 months pre-virus
The astonishing rally in Asian glove-maker stocks will extend further, as the coronavirus-led boom in demand shows no sign of abating, according to Citigroup Inc.
Malaysia’s Top Glove Corp. and Kossan Rubber Industries can each climb by about 75% over the next 12 months as the pandemic drives unprecedented growth in sales and profits for the sector, Megat Fais, an analyst, wrote in a note on Tuesday.
Glove makers are among the top gainers in a number of global equity indexes this year, outperforming many stay-at-home stocks, gold and even Tesla Inc. Shares of Top Glove, the world’s largest maker, have risen more than 400% this year while those of smaller rival Supermax Corp. have jumped over 1,300%.
Citi’s Fais isn’t concerned by such blips, noting that the lead time on orders to Asian glove makers have lengthened to about 12 months from pre-Covid levels of 1-2 months.
“Even with a vaccine, a structural step-up in glove usage is on the cards as the pandemic may well accelerate the narrowing of the gap between emerging-market and developed-market glove consumption,” the analyst wrote.
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