PETALING JAYA: Shares of the world’s largest glove maker, Top Glove Corp Bhd, closed lower on the first trading day of the new year despite having committed to a special dividend on top of its existing dividend policy.
The company announced yesterday that it would be committing to a special dividend of 20%, in addition to its existing dividend policy of a 50% dividend payout ratio on profit after tax and minority interests for the second, third and fourth quarter of its 2021 financial year.
At 5pm yesterday, Top Glove plunged 62 sen to RM5.50. It was also the most actively traded stock of the day.
A dealer said the drop in Top Glove’s share price could be attributed to institutional funds looking to overhaul their investment portfolios.
“Due to the Covid-19 pandemic, glove stocks were all the rage in 2020. However, with the vaccine now available, many fund managers may want to diversify their portfolios into other asset classes.”
An analyst said the drop in Top Glove’s share price could also be due to the recent environmental, social and governance concerns over the company.
Top Glove has been in the spotlight due to its workers’ housing conditions and high Covid-19 infections, which subsequently led to the implementation of the enhanced movement control order.
Kenanga Research in a recent report noted that despite strong earnings projection growth for 2021, concerns over environmental, social and governance could potentially de-rate the stock.
Top Glove has been given the green light by the relevant authorities to reopen their factories.
As at Dec 20, 2020, all its factories in Meru, Klang have resumed operations with stricter adherence to SOPs.
Kenanga Research said efforts to source for more worker accommodations and to improve existing ones have been ongoing, for which the group has already invested RM70mil.
“In addition, the group has spent RM20mil purchasing 100 units of apartments over the past two months and is also renting more houses for its workers.
"Over the medium term, the group has earmarked approximately RM100mil to be invested in workers’ facilities and accommodation, which includes building mega hostels in Klang and Banting with a combined capacity of 7,300 persons fully equipped with a suite of amenities and facilities," it said.
The drop in Top Glove’s share price was also reflected in other glove stocks.
Hartalega Holdings Bhd tumbled RM1.66 to RM10.48, Supermax Corp Bhd fell 50 sen to RM5.51, Comfort Gloves Bhd dipped 19 sen to RM2.80, Careplus Group Bhd declined seven sen to RM2 and Kossan Rubber Industries Bhd declined 56 sen to RM3.94.