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KUALA LUMPUR (Dec 29): As Covid-19 vaccines gain momentum, glove makers’ stocks may find it difficult to cheer at the end of the year.
Although most glove makers’ stock prices have fallen by at least a third from their peaks, some of them are set to post record gains, but the selling pressure remained on the glove sector.
Glove manufacturers continued to dominate the list of top losers today.
At the midday break, Hartalega Holdings Bhd fell 46 sen or 3.69% to RM12, making it the second biggest loser on the stock market. If compared to its recent peak of RM20.50 on August 3, the stock is down 41.46%.
Supermax Corp Bhd, which was the fourth biggest loser, was down 30 sen or 4.69% to RM6.09. The stock is down 48.78% from its recent peak of RM11.89 on August 6.
Top Glove Corp Bhd, which was also among the top losers, fell 17 sen or 2.72% to RM6.09. It has also lost 36.56% since its recent peak of RM9.60 on October 19. The market capitalization of the world’s largest glove maker has also fallen to RM49.94 billion, a far cry from its peak of RM78.73 billion.
Kossan Rubber Industries Bhd, among the top losers, lost 10 sen or 2.08% to RM4.70. If compared to its recent peak of RM9.59 on August 6, the counter is down 50.99%.
Comfort Gloves Bhd, also among the top losers, fell 12 sen or 3.85% to RM3. The counter has lost 55.62% since its recent peak of RM6.76 on August 3.
With only two days left until the last trading day of 2020, fund managers and heads of research interviewed by theedgemarkets.com were of the opinion that glove accountants are unlikely to see a sudden recovery in the stock price since the recent weakness.
Fortress Capital Asset Management CEO Thomas Yong said market sentiment has turned bearish in glove stocks since the vaccine’s availability announcement despite strong earnings performance achieved by glove companies. until now.
“Although glove company valuations have fallen significantly from a very high level earlier this year, news of the vaccine launch will continue to weigh on market sentiment around glove stocks.
“A sharp rally in the share price is unlikely, but there could be an opportunity when the valuation of glove shares gradually normalizes to its historical average,” Yong said.
He also noted that it is widely known in the market that glove companies will exceed their highest profit record in 2021 for the entire year.
“The question now is not how much profit they can make in 2021, but how much growth they have left. The market is looking beyond glove companies’ 2021 earnings, and its focus now is on any possible reversal in the average selling price of gloves, which could come as early as the second half of 2021.
“The key question now is when will the balance between supply and demand for gloves be restored, where is it going to trigger a downward trend in glove prices,” he added.
Rakuten Trade Sdn Bhd head of research Kenny Yee also said that the party is over for the glove sector as funds will flow to others for a recovery play.
“I would rather be on the sidelines while the glove counters are consolidating until they stabilize in a trading range,” he said.
Yee also pointed out that the astronomical profits of glove companies are temporary; so you think glove share prices have already been recorded at such events.
Lee Chung Cheng, head of research at JF Apex, said the party is over for glove makers and said the opportunity for glove makers is diminishing as Covid-19 vaccines are gaining momentum.
Even though glove makers’ share prices have fallen significantly, he believes sentiment for glove makers remained weak.
“Even if you see there is value for glove manufacturers, you still want to wait a bit. The funds are profit taking, you don’t know how low it can go, “he said.
Lee also opined that stellar results for glove makers have been included in the share price.
“Investors are looking forward to the second half of next year, when all the new entrants come in, can the positive momentum be sustained?” joked.
Areca Capital Sdn Bhd CEO Danny Wong also pointed out that glove makers’ stock prices are unlikely to return to their peaks as sentiment (vaccine development) is against glove makers. gloves.
However, he fundamentally still likes glove stocks.
“If they can achieve their returns, they can show some kind of sustainable profit, I think glove makers are quite cheap at the moment,” Wong said, adding that he would still trade glove stocks.
He also noted that potential dividend or distribution returns (such as treasury stocks or bond issuance) are worth looking at glove manufacturers for their excellent earnings next year.
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