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PETALING JAYA: A vaccine for Covid-19 may be ready by the end of the year, the World Health Organization (WHO) has said, but that has hardly made a dent in glove makers who continued to trade resiliently in Bursa Malaysia.
Glove manufacturers were unmoved by the news and this is likely due to reported similar developments of potential vaccines that had previously been publicized, which had been listed on these stocks.
WHO Director-General Tedros Adhanom Ghebreyesus (photo below) was reported to have said there was hope that a vaccine would be developed by the end of this year. However, he did not elaborate on the development of the vaccine in the cable report.
Top Glove Corp Bhd
, which is also a component of the FBM KLCI, weathered the negative day yesterday, rising 16 sen to RM8.80.
The FBM KLCI declined 19.91 points, or 1.32%, to 1,489.56, but the Bursa Malaysia overall had a positive bias with 637 winners versus 373 losing stocks.
Other glove makers also held up well, with counters like Supermax Corp Bhd gaining 35 sen at RM9.58 and Rubberex Corp (M) Bhd adding 15 sin to RM6.02. However, Harlega Holdings Bhd was down 12 sen to RM16.90.
Sometime in mid-August, when it was announced that Russia had a Covid-19 vaccine in the pipeline, all seven publicly traded glove makers fell 10%.
This was the time when news of a vaccine had a huge impact on glove manufacturers as it was anticipated that the demand for gloves would decline once a vaccine was found.
Market watchers said this fact may already have been priced in, as investors are already aware of these possibilities before deciding to buy stocks. Yesterday’s sentiment may have been supported by other factors as well.
Confidence in the world’s largest glove maker Top Glove may also have been supported following a report speculating that the company could soon declare a special dividend.
UOB Kay Hian (UOBKH) said that a special dividend, if declared by Top Glove management, would be possible in the third quarter of the financial year ending August 31, 2021 (fiscal year 21).
“Based on the company’s dividend policy payment of 50% on projected earnings, the implicit dividend yield for fiscal year 21 is 7.7%. For each additional 10% payment, the dividend yield increases by 1.6%, ”said UOBKH.
“That said, dividend yields would moderate to 2.1% and 1.2% in FY22-FY23 respectively,” he added.
UOBKH said the outlook for Top Glove remains attractive with the possibility of higher dividend payments.
“In the meantime, plans to venture upstream would help Top Glove to secure the long-term supply of nitrile rubber. Meanwhile, the lifting of the release withholding order by US Customs and Border Protection. But the impact on overall sales is negligible, “he said.
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