Top Glove Corporation Bhd fell 1.92% to RM0.765 in afternoon trading on Friday, with 21.97 million shares changing hands as the glove maker came under pressure amid a cautious outlook for the sector.
The stock opened at RM0.780, climbed to an intraday high of RM0.800, then slipped to a low of RM0.760. Its last traded price was RM0.765, down 1.5 sen from Thursday’s close of RM0.780.
Selling pressure remained evident, with 3.50 million shares offered at RM0.770 compared with 1.06 million shares queued at RM0.765.
The weakness comes after RHB Research maintained its UNDERWEIGHT call on Malaysia’s glove sector despite stronger-than-expected second-quarter earnings and expectations of higher selling prices in October.
RHB said the earnings improvement was largely driven by higher selling prices implemented to offset rising raw material costs rather than stronger underlying demand.
The research house also highlighted persistent industry overcapacity and continued pricing pressure from Chinese manufacturers as key challenges for Malaysian glove makers.
Generic nitrile glove average selling prices had fallen to US$19 to US$20 per 1,000 pieces in September from US$27 to US$28 in May.
Malaysian manufacturers are planning to raise selling prices by US$2 to US$2.50 per carton in October, according to RHB’s industry checks, although most of the increase is expected to offset higher gas costs.
RHB said Chinese manufacturers continue to have a cost advantage due to cheaper coal and more secure nitrile latex supplies, giving them greater flexibility in pricing.
The research house noted that Top Glove, Supermax Corporation and Kossan Rubber Industries had delivered better-than-expected earnings in the latest reporting quarter.
However, it said several quarters of improved profitability would be needed before a sustained recovery could materially change valuations, with the industry’s excess capacity remaining a key structural issue.
