GLOVEs recoup some losses after yesterday's selldown

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Publish date: Tue, 15 Dec 2020, 11:31 AM

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https://www.theedgemarkets.com/article/rare-media-rebuke-top-glove-demands-accurate-reporting-amid-covid19-flare

Glove stocks recoup some losses after yesterday's selldown

Tan Siew Mung

theedgemarkets.com

December 15, 2020 10:44 am +08

Glove stocks recoup some losses after yesterday's selldown

KUALA LUMPUR (Dec 15): Glove stocks dominated the list of top gainers this morning as investors were bargain-hunting after a heavy selldown yesterday.

Glove makers among the list included Hartalega Holdings Bhd, Kossan Rubber Industries Bhd, Top Glove Corp Bhd, Comfort Gloves Bhd and Supermax Corp Bhd.

At 10am, Hartalega had risen 16 sen or 1.34% to RM12.12, Kossan went up 14 sen or 2.98% to RM4.84, Top Glove gained 13 sen or 2.06% to RM6.43, Comfort Gloves climbed 11 sen or 3.4% to RM3.35 and Supermax expanded eight sen or 1.18% to RM6.84.

Hong Leong Investment Bank (HLIB) Research said in a report today it had an "overweight" call for the glove sector as glove makers' share prices had come off even as Covid-19 cases would continue to rise in 2021.

Top Glove is among its top picks as it believes concerns over negative repercussions from Covid-19 vaccines seem to be overplayed for a number of other reasons besides rising infections, namely that gloves would still be needed to administer vaccines, and post-pandemic glove demand, when it happens, would still be structurally higher than pre-pandemic levels due to higher hygiene awareness.

“We see recent share price weakness as an opportunity to accumulate,” it said.

TA Securities also said in a recent report that despite encouraging vaccine developments, it reiterated its "overweight" stance on the rubber glove sector.

“We remain bullish as we believe supernormal earnings are here to stay in 2021 and 2022; vaccines will cause a surge in personal protective equipment (PPE) usage, and demand will outstrip supply over the next two years,” it said.

Its top picks are Hartalega (TP: RM25.97) and Kossan (TP: RM9.45), whose average selling prices (ASPs) would be raised more aggressively than peers as the latter play catch-up.

“Also, these companies are direct beneficiaries of increasing daily [new] Covid-19 cases and exceptionally high glove demand.

“2021 is a foregone conclusion — that profit will be exceptional and the same order backlog has flowed into 2022 with no indication of ASPs subsiding yet,” it said.