KUALA LUMPUR (Jan 3): Top Glove Corp Bhd and Careplus Group Bhd were among the most actively traded stocks on Wednesday’s morning trade, as analysts have turned more optimistic on the glove sector in view of the improved operating environment following the end of inventory drawdown by buyers and the narrowing of the pricing gap between local and Chinese manufacturers.

Top Glove — the fourth most active stock on Bursa Malaysia — saw its share price increase by 2.75% or 2.5 sen to 93.5 sen. Its market capitalisation stood at RM7.67 billion while trading volume was 30.6 million. In the past month, Top Glove has risen over 14%.

Meanwhile, shares of Careplus were two sen 4.88% higher at 43 sen, giving it a market value of RM252.86 million. The ninth most active stock’s trading volume was 226.83 million at the time of writing.

Careplus’s share price has risen over 43% in the past month.

Shares of other rubber glove counters Hartalega Holdings Bhd rose 11 sen or 4.09% to RM2.80 with some 3.95 million shares changed hands; Kossan Rubber Industries Bhd expanded four sen or 2.13% to RM1.92 with some 5.22 million shares traded while Supermax Corp Bhd inched up 1.5 sen or 1.6% to 95.5 sen with 4.52 million shares done.

As excess inventories among glove buyers witness a substantial decrease and the pricing disparity between local players and Chinese players diminishes, the overall operational landscape for glovemakers is exhibiting positive trends. This favourable shift has translated into an increase in orders for glove manufacturers, according to Hong Leong Investment Bank (HLIB) Bhd.

Notably, it said the glove manufacturers' initiative to permanently and temporarily decommission less-efficient plants is yielding positive results, leading to improved utilisation rates and lower fixed costs. This, in turn, translates to narrower losses and improved profitability for the glovemakers, said the research house in a note.

“Observing the improving trend in the operational landscape, we upgrade our rating on Hartalega to ‘Hold’ [from ‘Sell’], while maintaining our ‘hold’ recommendation for Top Glove and Kossan. With that, we also upgrade our sector rating to ‘neutral’ [from ‘Underweight’ previously],” said HLIB.

Meanwhile, JP Morgan Asia Pacific Equity Research, which earlier in April 2023 had said that the path to profitability of Malaysia’s glove sector still lacked visibility, has turned bullish on the sector by going selectively (and non-consensus) with "overweight" ratings on Hartalega and Kossan while retaining its "underweight" rating on Top Glove.

In a note on Dec 27, the research house said the industry has witnessed a pick-up in demand following two and a half years of inventory de-stocking.