PETALING JAYA: The Covid-19 pandemic created an explosion of earnings and in the share prices of Malaysian rubber glove stocks but those stocks have cratered as counters drop to pre-pandemic levels.
Speaking with StarBiz, Rakuten Trade head of equity sales Vincent Lau said rubber glove manufacturers have reported significant drop in profits for their latest financial quarter, adding that some even reported losses.
This has resulted in glove stocks losing sentiment among investors.
However, Lau believes the glove stocks will trade at a stable pre-pandemic level as glove companies are sitting on a decent cash amount that will tie them over.
Areca Capital chief executive officer Danny Wong said the outlook for the rubber glove industry was dim.
In addition to the weak performances in the latest financial quarter results, he believes labour issues could be one of the factors affecting the industry.
This includes the increase in minimum wages as well as the lack of labour supply.
Areca Capital chief executive officer Danny Wong said the outlook for the rubber glove industry was dim.
With commodity prices being pushed up, Wong believes the other concern would be an increase in raw material prices that would consequently affect the cost prices.
MIDF Research noted that the performance of glove companies under its coverage was below expectations.
“The lacklustre performance was due to the industry coming off a period of exponential growth on the back of the Covid-19 pandemic,” it said.
As the country moved into the endemic phase, the average selling price (ASP) for gloves hit a downtrend while demand followed suit.
Moreover, the influx of new players resulted in higher supply, adding more pressure to the ASPs.
“The buying activities have moderated in tandem with the reduction in consumption levels as large buyers, such as government and big hospital chains, are full or near full in terms of personal protective equipment supplies,” the research house added.
Top Glove Corp Bhd, the third-most active counter on Bursa Malaysia yesterday, fell 11 sen or 8% to RM1.26, with over 72 million shares traded.
Top Glove Corp Bhd, the third-most active counter on Bursa Malaysia yesterday, fell 11 sen or 8% to RM1.26, with over 72 million shares traded.
Top Glove’s latest quarterly financial result showed that net profit for the second quarter ended Feb 28, 2022 (2Q22) plunged to RM87.5mil from RM2.87bil a year ago.
Consequently, for the first half of its financial year 2022, the group reported a net profit of RM273.27mil compared with RM5.23bil in the previous comparative period.
Meanwhile, Hartalega Holdings Bhd reported a net loss of RM197.9mil for the final quarter of its financial year ended March 31, 2022 (4Q22) compared with a net profit of RM1.12bil in the previous corresponding quarter.
However, the group’s net profit rose to RM3.23bil in its financial year 2022 compared with RM2.89bil in previously.