Hot Stocks Glove stocks soar on bird flu outbreak

Hot Stocks Glove stocks soar on bird flu outbreak
Business & Markets 2013
Written by Chong Jin Hun of theedgemalaysia.com
Monday, 08 April 2013 11:03


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Monday, 8 April 2013

KUALA LUMPUR (April 8): Investors continue to accumulate shares of rubber glove manufacturers in anticipation that the bird flu outbreak in China will spur demand for their products.

At 10.41 am, Top Glove Corp Bhd which traded among top gainers, was at RM5.96 with some 1.2 mllion shares done. The stock had risen as much as 4.4% to RM5.98 earlier.

Supermax Corp Bhd, which changed hands at RM2.09 with some 4.5 million shares done, gained as much as 4.5% to RM2.11 earlier.

Rubberex Corp Bhd, which was among actively-traded stocks, rose seven sen or 9% to 81 sen.

Affin Investment Bank Bhd analyst Mandy Teh wrote in a note today that while the actual increase in the use of gloves is not immediate, but anticipation of higher utilisation of gloves in the coming months will prompt healthcare firms to increase inventory of the product.

This is expected to add pressure on glove supply, as manufacturers operate close to maximum optimal capacity, with an average utilisation rate of 90%.

"We believe the hygiene concerns of both individuals and governments will gradually lead to higher glove usage over time.

"In fact, the rubber glove industry is eyeing China and India, where the anticipated demand (should their governments start to enforce the use of examination gloves) may increase by 2-3 times of the current world demand of 160bn pieces," Teh said.

The analyst is maintaining Affin's "overweight" recommendation on the sector.

"We maintain our OVERWEIGHT view with Supermax (BUY, RM2.50) as our top pick for the sector due to its undemanding valuations and good earnings visibility," Teh said

Reuters reported that China is confident it can control an outbreak of a new strain of bird flu, a senior Chinese health official said on Sunday as the World Health Organization (WHO) said there had now been 21 human cases of the H7N9 flu with six deaths.

China has said it is mobilising resources nationwide to combat the new strain, monitoring hundreds of close contacts of confirmed cases and culling tens of thousands of birds where traces of the virus were found.

"We are confident we can effectively control it (H7N9)," the head of China's National Health and Family Planning Commission Li Bin told Reuters.

Li did not elaborate, but she is the most senior Chinese health official yet to publicly comment on the subject.