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KUALA LUMPUR (Dec 15): Rubber glove stocks were down yesterday amid a string of negative news in recent days, including reports of a growing number of infections at the factories of several manufacturers of gloves, an industry downgrade from JP Morgan, as well as the launch of the Covid-19 vaccine.
Hartalega Holdings Bhd topped the list of people who declined by value, with its share price falling RM1.76 or 12.8% to RM11.96, followed by Supermax Corp Bhd (down 80 sen or 10.6% to RM6.76), Kossan Rubber Industries Bhd (down 69 sen or 12.8% to RM4.70) and Top Glove Corp Bhd (down 60 sen or 8.7% to RM6.30).
Hartalega said yesterday that it has completed mandatory Covid-19 precautionary tests of all its foreign workers and has further extended the tests to its local employees.
It said 35 workers – 20 from the group’s Bestari Jaya facilities and 15 from its Sepang manufacturing complex – tested positive for the virus, representing 0.4% of the total 8,772 employees, including local employees, as well as outsourced providers such as security personnel and canteen operators. .
Meanwhile, Reuters said Top Glove saw the first Covid-19-related death among its workers – a 29-year-old worker from Nepal who died due to Covid-19 pneumonia with pulmonary fibrosis.
The group also saw a temporary closure of its 28 factories in Klang last month, amid the virus outbreak among its workers, with an Enhanced Movement Control Order at its workers’ dormitories effective November 17. The one-month closure was lifted yesterday.
Infection outbreaks aside, JP Morgan over the weekend had rebooted Top Glove coverage and initiated coverage of Hartalega and Kossan, setting fair values well below glove makers’ stock prices.
It set a fair value of RM3.50 for Top Glove (with an underweight rating), RM8.50 for Hartalega and RM3.80 for Kossan, and its analysts expect glove prices to weaken in the second half of 2021.
JP Morgan analysts Jeffrey Ng and YY Cheah noted that the glove sector has become saturated, “which implies a significant downward momentum.”
“Short-term concerns about rising costs, plus the risk of long-term overcapacity, represent downside risks. Once Malaysia lifts the ban on short selling, the downward pressure could be amplified, ”they wrote.
They noted that the test trends of 13 out of 17 densely populated nations have started to decline from their peaks since late September, which they said could be an early indication that glove prices have also peaked.
The same goes for producer earnings and share prices, they added.
Analysts pointed to oversupply as a key problem amid major capital investment plans from the big four producers, as well as new players.
However, JP Morgan said that a second global wave of Covid-19 and any unplanned disruption to glove production could drive glove prices to new heights.
On the vaccine front, Reuters He said the first shipments through the United States will inoculate more than 100 million people by the end of March.
Closer to home, Singapore became the first Asian country to approve the Pfizer-BioNTech vaccine, hoping to begin receiving injections by the end of the year, while Indonesia aims to supply unsubsidized vaccines to 75 million people in the next eight or nine months. .
Meanwhile, Putrajaya has plans to increase its purchase of the Covid-19 vaccine to meet the immunization needs of 60% to 70% of Malaysians, up from 30% today.
Prime Minister Tan Sri Muhyiddin Yassin said providers were asked to expedite delivery of the vaccine, which is scheduled to arrive in March.
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