Top Glove shares erase Covid gains, analysts downgrade stock

Shares of High Glove, the world’s largest medical glove maker, have erased a lot of their beneficial properties notched through the Covid-19 pandemic as analysts flip extra pessimistic on the corporate’s outlook.

High Glove’s shares on the Malaysian inventory trade have tumbled by greater than 60% this yr to shut at 2.20 Malaysian ringgit (round $0.52) on Monday.

That is 77% off the inventory’s record-high closing value reached on Oct. 19 final yr, and round 0.70 ringgit increased than its final traded value in 2019 — earlier than Covid unfold globally.

A number of analysts have downgraded the inventory. Newest knowledge on Refinitiv confirmed that 11 out of 23 analysts rated High Glove as a “promote” or “sturdy promote” — a rise from six such rankings a month in the past.

One analyst that downgraded High Glove from “maintain” to “promote” is Ng Chi Hoong, an analyst from Malaysia-based Affin Hwang Funding Financial institution. Ng mentioned in a report final week that the corporate’s newest quarterly outcomes have been “comparatively weak,” whereas its upcoming itemizing in Hong Kong would crush the share value.

High 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 corporate mentioned 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.  

Just a few days earlier than the earnings launch, High Glove mentioned it acquired shareholders’ approval for a twin major itemizing in Hong Kong, which it expects to finish early subsequent yr. The corporate presently has a major itemizing in Malaysia and a secondary itemizing in Singapore.

Analysts have warned that the Hong Kong itemizing would dilute High Glove’s earnings per share. Such issues contributed to the autumn within the firm’s share value this yr.     

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.

High Glove and Hartalega have been amongst JPMorgan’s least most well-liked shares in Malaysia.

“Current channel checks recommend pricing energy shifting again to the consumers,” JPMorgan mentioned 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 cause why the Wall Road large has an “underweight” advice for Malaysia for 2022.

An underweight place usually displays an investor’s view that the market or inventory will underperform.