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World NewsTop Glove shares erase Covid gains, analysts downgrade stock

Top Glove shares erase Covid gains, analysts downgrade stock

Latex gloves are full of water in a watertight check room at a Top Glove manufacturing facility in Selangor, Malaysia, on Dec. 3, 2015.

Charles Pertwee | Bloomberg | Getty Images

Shares of Top Glove, the world’s largest medical glove maker, have erased a lot of their good points notched in the course of the Covid-19 pandemic as analysts flip extra pessimistic on the corporate’s outlook.

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

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

Several analysts have downgraded the stock. Latest information on Refinitiv confirmed that 11 out of 23 analysts rated Top Glove as a “sell” or “strong sell” — a rise from six such scores a month in the past.

One analyst that downgraded Top Glove from “hold” to “sell” is Ng Chi Hoong, an analyst from Malaysia-based Affin Hwang Investment Bank. Ng mentioned in a report final week that the corporate’s newest quarterly outcomes had been “relatively weak,” whereas its upcoming itemizing in Hong Kong would overwhelm the share worth.

Top 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 company said gross sales quantity fell on account of elevated competitors and provide, whereas common promoting costs have come down from final yr’s peak ranges.  

A couple of days earlier than the earnings launch, Top Glove mentioned it obtained shareholders’ approval for a dual primary listing in Hong Kong, which it expects to finish early subsequent yr. The firm presently has a main itemizing in Malaysia and a secondary itemizing in Singapore.

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

Least most well-liked Malaysia shares

Stock picks and investing tendencies from CNBC Pro:

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

“Recent channel checks suggest pricing power shifting back to the buyers,” JPMorgan mentioned in a report earlier this month, including that “demand had waned from peak pandemic levels while supply from China and Thailand continues to flood the market.”

The weak outlook for glove shares is a cause why the Wall Street big has an “underweight” advice for Malaysia for 2022.

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


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