Rubber glove manufacturers were among the most traded stocks on Bursa Malaysia today.
Malaysia’s biggest glove makers – Top Glove Corp Bhd, Hartalega Holdings Bhd, Kossan Rubber Industries Bhd, and Supermax Corp Bhd – were among the top 10 most traded stocks on Bursa Malaysia.
Top Glove was the most actively traded stock with 210.5 million shares changing hands followed by Supermax at third spot with 64.4 million shares traded, along with Hartalega (46.2 million shares) and Kossan (37 million shares) at eighth and ninth spots.
However, their share price increases were significantly less than yesterday’s surge. Top Glove rose 4.6% or 3.5 sen to 80 sen, giving it a market capitalisation of RM6.57 billion. It had risen 21.4% or 13.5 sen yesterday.
Hartalega was up 5.4% or 6 sen at RM1.17 compared with the 19.4% rise yesterday. At the current price, it is valued at RM4.01 billion.
Kossan edged up 1.7% or 2 sen to RM1.21, valuing it at RM3.1 billion. Its shares jumped 15.5% yesterday.
Supermax was the odd one out today when it fell 2.3% or 1 sen to 42 sen, valuing it at RM1.37 billion. It closed nearly 23% higher yesterday.
The surge in the glove counters yesterday was primarily driven by higher crude oil prices and a recent price hike by China’s market leader Intco Medical Technology Co Ltd.
Oil supply disruptions due to renewed escalation in the US war on Iran along with Ukrainian attacks on Russia’s oil refineries pushed Brent crude to a four-month high of US$109.97 a barrel earlier today before easing to US$104.30 at the time of writing.
Higher oil prices raise the cost of nitrile, the primary raw material for synthetic gloves. Analysts said the market was pricing in the prospect of customers placing larger orders ahead of anticipated price increases. Malaysian glove companies manufacture both rubber and synthetic gloves.
In a recent note, Affin Hwang Investment Bank said it is more upbeat on the glove sector’s ability to maintain healthy margins, as pricing competition has been less aggressive than expected despite recent volatility.
The price gap between Malaysian and Chinese glove makers has narrowed to about US$0.50 per 1,000 pieces from nearly US$4 in 2022-2023, while limited capacity expansion in China could support more stable prices.
It upgraded the sector to “overweight” from “underweight”, citing low valuations and signs that earnings have bottomed out.
The improved outlook for the sector comes as glove average selling prices (ASPs) started recovering after falling in recent months, with manufacturers moving to pass higher raw material costs to customers.
Maybank Investment Bank said ASPs increased to about US$19-US$20 per 1,000 pieces in September from US$18-US$19 in July and August and could rise further to US$22-US$23 in October.
It maintained a “neutral” view on the sector and raised its target price for Top Glove, Hartalega, and Kossan.
However, it cautioned that much of the improved outlook had already been reflected in share prices following yesterday’s rally. - FMT
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