Stock Groups

Top Glove shares erase Covid gains, analysts downgrade stock


A watertight testing room was set up at the Top Glove factory, Selangor in Malaysia on December 3, 2015.

Getty Images| Bloomberg | Getty Images

The Shares Top GloveThe world’s biggest medical glove manufacturer, Xerox, has erased large amounts of its inventories. gains notched during the Covid-19 pandemicAs analysts become more pessimistic about the company’s prospects,

Top Glove shares have plunged more than 60% on Malaysia’s stock exchange to close at $2.20 Malaysian Ringgit on Monday.

That’s 77% off the stock’s record-high closing price reached on Oct. 19 last year, and around 0.70 ringgit higher than its last traded price in 2019 — before Covid spread globally.

The stock has been downgraded by several analysts. Latest data on Refinitiv showed that 11 out of 23 analysts rated Top Glove as a “sell” or “strong sell” — an increase from six such ratings a month ago.

Ng Chi Hoong of Affin Hwang Investment Bank, Malaysian analyst that downgraded Top Glove’s rating to “sell”, was one analyst. Ng stated in a last week report that Top Glove’s most recent quarterly results were “relatively poor” and its Hong Kong listing would cause a decline in share prices.

Top Glove earlier this month reported net profit of 185.7 million Malaysian ringgit for the quarter ended November — a 92% fall from the same period a year ago. The company saidSales volume declined due to more competition and increased supply. However, average selling prices are down from their peak last year.  

Top Glove stated that it had received shareholder approval a few days prior to the earnings release. a dual primary listing in Hong KongThe company expects that it will complete the IPO in early 2019. The company is currently listed in Malaysia as a primary and secondary stock exchange.

Analysts warned Top Glove that the Hong Kong listing could reduce its earnings per share. This concern contributed to this year’s fall in share prices.     

Malaysia stock most preferred

Other Malaysian glove manufacturers have suffered as well.

HartalegaShares have dropped by 56% since Monday’s close. Supermax Kossan Rubber IndustriesDuring the same time, they plunged by approximately 73% and 59% respectively.

CNBC Pro: Stock pickings and investment trends

Top Glove was among the least-favorite stocks of JPMorgan in Malaysia. Hartalega was also included.

JPMorgan reported earlier in the month that channel checks had shown pricing power shifting back toward the buyers. They also stated that the “demand has waned” from peak pandemic level while the “supply from China and Thailand continues flooding the market.”

Because of the weak outlook on glove stocks, Wall Street’s giant recommends Malaysia to be “underweight” in 2022.

A stock’s position of being underweight is usually indicative that an investor believes the stock or market will fail to perform.