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KUALA LUMPUR: Top Glove Corp, the world’s largest manufacturer of medical gloves, increased its proposed dividend on Monday as its shares came under pressure from speculation that the launch of Covid-19 vaccines could affect demand for its products. .
The company, whose shares soared last year when the pandemic took hold of it, said it would pay 70% of profits for the rest of its financial year, covering the second through fourth quarters, up from 50% previously planned.
This was “in consideration of good earnings performance and strong cash flow, and to reward its shareholders,” it said in a statement.
However, Top Glove shares fell as much as 14.5% to their lowest level since the end of June, and smaller rivals Hartalega Holdings and Kossan Rubber Industries fell as much as 14.2% and 13.3% respectively.
“As we enter a new year, people have more hope that the pandemic is coming to an end, while in reality, we have not seen the number of cases decrease,” said MIDF Research analyst Ng Bei Shan.
“We still need to see how effective vaccines can be on a large scale,” he added.
Ng said the Top Glove dividend was already considered attractive due to the higher expected earnings, even without the additional payment.
Glove makers have also come under scrutiny for their labor practices this year, with the US Customs and Border Protection imposing a ban on two Top Glove subsidiaries in July.
Authorities recently stepped up inspections at glove manufacturing companies after the Covid-19 outbreaks at Top Glove and Kossan Rubber.
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