Vaccine or not, glove makers roll on


Top Glove Corp Bhd, which is also a component of the FBM KLCI, bucked 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 broader Bursa Malaysia had a positive bias to it with 637 gainers versus 373 losing stocks.

PETALING JAYA: A vaccine for the Covid-19 may be ready by year-end, the World Health Organisation (WHO) has said, but that has hardly made a dent on glove makers who continued to trade with resilience on Bursa Malaysia.

Glove makers were unmoved by the news and this is likely due to such similar reported developments of potential vaccines that had already been publicised earlier, which had been priced in these stocks.

WHO director-general Tedros Adhanom Ghebreyesus (pic below) was reported as saying that there was hope for a vaccine to be developed by the end of this year. He, however, did not elaborate further on the vaccine development in the wire report.

Top Glove Corp Bhd, which is also a component of the FBM KLCI, bucked 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 broader Bursa Malaysia had a positive bias to it with 637 gainers versus 373 losing stocks.

Other glove makers also held up well, with counters such as Supermax Corp Bhd gaining 35 sen to RM9.58 and Rubberex Corp (M) Bhd adding 15 sen to RM6.02. However, Harlega Holdings Bhd declined 12 sen to RM16.90.

Sometime in mid-August, when it was announced that Russia had a Covid-19 vaccine ready, all seven public-listed glove makers fell by some 10%.

This was the time when news of a vaccine had a big impact on the glove makers as it was anticipated that demand for gloves would fall once a vaccine is found.

Market observers said this fact may have already been priced in now as investors are already aware of such possibilities before deciding to buy into the glove stocks. The sentiment yesterday may also have been supported by other factors.

Sentiment on the largest glove maker in the world, Top Glove, may also have been supported following a report which speculated that the company could soon declare a special dividend.

UOB Kay Hian (UOBKH) said that a special dividend, if declared by Top Glove’s management, would be possible in the third quarter of the financial year ending Aug 31,2021 (FY21).

“Based on the company’s dividend policy payout of 50% on projected earnings, the implied dividend yield for FY21 is 7.7%. For every 10% additional payout, the dividend yield increases by 1.6%, ” UOBKH said.

“That said, dividend yields would moderate to 2.1% and 1.2% in FY22-FY23 respectively, ” it added.

UOBKH said prospects for Top Glove remained attractive with the possibility of an increased dividend payout.

“Meanwhile, plans to venture upstream would help Top Glove secure precious nitrile rubber supply over the longer run. In the meantime, the lifting of the Withhold Release Order by the US Customs and Border Protection remains uncertain. But the impact to overall sales is negligible, ” it said.

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