Latex gloves are crammed with water in a watertight check room at a Top Glove manufacturing unit in Selangor, Malaysia, on Dec. 3, 2015.
Charles Pertwee | Bloomberg | Getty Images
Shares of Top Glove, the world’s largest medical glove maker, have erased a lot of their gains notched during the Covid-19 pandemic as analysts flip extra pessimistic on the firm’s outlook.
Top Glove’s shares on the Malaysian inventory change have tumbled by greater than 60% this yr to shut at 2.20 Malaysian ringgit (round $0.52) on Monday.
That’s 77% off the inventory’s record-high closing worth reached on Oct. 19 final yr, and round 0.70 ringgit larger than its final traded worth in 2019 — earlier than Covid unfold globally.
Several analysts have downgraded the inventory. Latest information on Refinitiv confirmed that 11 out of 23 analysts rated Top Glove as a “promote” or “sturdy promote” — a rise from six such scores a month in the past.
One analyst that downgraded Top Glove from “maintain” to “promote” is Ng Chi Hoong, an analyst from Malaysia-based Affin Hwang Investment Bank. Ng stated in a report final week that the firm’s newest quarterly outcomes had been “comparatively weak,” whereas its upcoming itemizing in Hong Kong would crush the share worth.
Top Glove earlier this month reported web revenue of 185.7 million Malaysian ringgit for the quarter ended November — a 92% fall from the identical interval a yr in the past. The company said gross sales quantity fell as a consequence of elevated competitors and provide, whereas common promoting costs have come down from final yr’s peak ranges.
A couple of days earlier than the earnings launch, Top Glove stated it obtained shareholders’ approval for a dual primary listing in Hong Kong, which it expects to finish early subsequent yr. The firm presently has a major itemizing in Malaysia and a secondary itemizing in Singapore.
Analysts have warned that the Hong Kong itemizing would dilute Top Glove’s earnings per share. Such issues contributed to the fall in the firm’s share worth this yr.
Least most popular Malaysia shares
Share costs of different Malaysian glove makers have additionally suffered.
Hartalega shares have fallen by round 56% this yr as of Monday’s shut. Supermax and Kossan Rubber Industries have plunged by roughly 73% and 59%, respectively, throughout the identical interval.
Top Glove and Hartalega had been amongst JPMorgan’s least most popular shares in Malaysia.
“Recent channel checks counsel pricing energy shifting again to the patrons,” JPMorgan stated in a report earlier this month, including that “demand had waned from peak pandemic ranges whereas provide from China and Thailand continues to flood the market.”
The weak outlook for glove shares is a purpose why the Wall Street big has an “underweight” advice for Malaysia for 2022.
An underweight place sometimes displays an investor’s view that the market or inventory will underperform.