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KUALA LUMPUR (Sept. 9): Bursa Malaysia’s Health Index fell the most in percentage terms in morning trading today as investors continued to shed health stocks.
At 11.15 a.m. M., The health care index fell 91.18 points or 2.54% to 3,502.92.
The sanitary indicator includes manufacturers of rubber gloves. The big four rubber glove stocks Top Glove Corp Bhd, Hartalega Holdings Bhd, Supermax Corp Bhd and Kossan Rubber Industries Bhd were among the main losers on the local stock market as they suffered heavy losses earlier today.
At 11.30 a.m. M., Kossan led the losses and fell 7.68% or 96 sen to RM11.54 while Supermax fell 4.88% or 41 sen to RM8.
Hartalega fell 2.65% or 36 sen to RM13.24 while Top Glove fell 4.58% or 35 sen to RM7.29.
Top Glove and Hartalega are also members of FBM KLCI.
In a Sept. 8 note, CGS-CIMB Research analyst Walter Aw wrote that the research house had maintained its “add” call on Top Glove, with an unchanged price target of RM9.20.
Aw said the “add” call is based on Top Glove as the key beneficiary of the current supply and demand dynamics in the glove sector due to Covid-19, as it is the largest glove manufacturer globally by capacity. , with a production capacity of 85.2 billion. pieces per year as of August 31.
Due to Covid-19, Top Glove continues to witness strong glove demand as its nitrile glove sales lead time is now over 20 months to the end of calendar year 2021, up from 18 months in June. of this year.
Despite the increased flow of news about the possible discovery of a Covid-19 vaccine, Top Glove believes glove use globally will remain strong even in the event that a Covid-19 vaccine is discovered, mainly due to the growing awareness of health and hygiene in developing countries. as a greater use in the medical and non-medical sectors.
“Top Glove expects a further increase in the average selling price (ASP) for nitrile gloves by + 20% monthly [month-on-month] in September and October 2020, and potentially another + 10% mom in November 2020.
“Additionally, Top Gloves also anticipates ASPs for latex gloves to increase 5% mum in September and October 2020. This is supported by Top Glove which recently received more spot orders through the end of CY20, as it expects to allocate up to a 30% (from 20-25% previously) of their total capacity for future spot orders, ”Aw said.
Aw expects Top Glove ASP to grow 22% for the financial year ending August 31, 2020 (FY20) and increase 45% for FY21, before declining 36% for FY22.
Despite the rise in raw material prices, in particular nitrile butadiene due to supply shortages, Top Glove has said it is not overly concerned about rising raw material prices as the amount of hikes ASP will be more than enough to make up for it.
Overall, Aw has maintained its earnings per share projection for Top Glove for the periods between fiscal year 20 and fiscal year 22.
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