KUALA LUMPUR (June 29): After taking a breather in the past two weeks, glove makers staged some strong moves today amid the worsening Covid-19 pandemic situation in some countries.
Despite the generally lacklustre trading on Bursa Malaysia, which saw the FBM KLCI staying in the red throughout the day, the Bursa Healthcare index was largely in the green, rising some 2.3% or 51.06 points to 2,237.69.
The rebound of glove stocks was led by Supermax Corp Bhd, up 54 sen or 7.88% to RM7.38, and Top Glove Corp Bhd, up 30 sen or 2.01% to RM15.22.
As for the other big boys, Hartalega Holdings Bhd rose 20 sen or 1.68% to RM12.14, while Kossan Rubber Industries Bhd climbed 16 sen or 2.01% to RM8.11.
Meanwhile, the advance by smaller-cap glove companies was led by Comfort Gloves Bhd (up 19 sen or 6.86% to RM2.96), followed by Rubberex Corp (M) Bhd (up eight sen or 2.88% to RM2.86) and Careplus Group Bhd (up eight sen or 6.25% to RM1.31).
Asset management firm Areca Capital Sdn Bhd chief executive officer Danny Wong commented that as long as the glove manufacturers’ fundamentals stay on track, especially given the uptick in Covid-19 cases, there is still a case for upside room.
“Currently in the glove space, it is the supplier’s market where suppliers get to dictate the pricing, which bodes well for glove companies’ profit margins.”
Wong added, however, that adverse risks to glove stocks are subject to the discovery of a Covid-19 vaccine and investors need to be able to justify the growth story, against the frothy valuations of individual glove stocks, before deciding to jump in.
Rakuten Trade Sdn Bhd research vice-president Vincent Lau concurred that the recent pullback in glove stocks was healthy and might have attracted accumulation by investors, especially against the backdrop of the spike in global Covid-19 cases.
Lau also said that the loosening of share margin valuations of glove-related counters might have added to the renewed interest in glove stocks.
According Maybank Investment Bank Bhd’s circulars, the investment bank has revised upwards its share margin valuations of glove counters.
The share margin valuation of Hartalega was increased to RM10.52 from RM8.97 previously, Top Glove to RM18 from RM9.41, Supermax to RM7.41 from RM3.38, Rubberex to RM2.21 from 81 sen, and Comfort Gloves to RM3.42 from RM2.29.
Meanwhile, the financing limit for Kossan remained at RM7.87 per share.