KUALA LUMPUR (Jan 16): The shares of Top Glove Corp Bhd and Supermax Corp Bhd rose on Wednesday in anticipation of a higher glove demand prompted by the flu epidemic now occurring in the US.
At 3.55pm, Top Glove was trading at RM5.38 after gaining seven sen or 1.32% on volume of 540,800 shares, while Supermax saw a three sen or 1.46% increase to RM2.06, with 1.46 million shares traded.
JF Apex Securities analyst Soong Wei Siang told theedgemalaysia.com: "The share price increase can’t be caused by environmental factors. Material prices are increasing and the stronger ringgit also looks unfavourable. It has to be the flu factor."
Affin Investment Bank said in a report that it was optimistic about the rubber glove sector, owing to the robust demand for gloves due to better healthcare awareness and more stringent health regulations in developed and emerging economies.
Its optimism also stemmed from the fact that continuing plant automation would create better operating efficiencies and help mitigate the effect of rising labour costs.
Although the price of latex, a key material in glovemaking, will increase to between RM6 and RM7.50 per kg, compared with the current price of RM6.24, the research house feels that it is unlikely to impact the earnings of glove manufacturers.
"This is mainly attributed to the soft China auto industry which would curtail the rise in demand for latex (used in tyres) and a potential supply glut of latex from Cambodia and Vietnam… We believe glove makers’ earnings and operating margins will remain healthy in 2013," it said.