Hot Stocks Glove companies continue to fall in second day

Hot Stocks Glove companies continue to fall in second day
Business & Markets 2013
Written by Jeffrey Tan of theedgemalaysia.com
Friday, 20 September 2013 15:56

KUALA LUMPUR (Sept 20): Major rated glove companies -- HARTALEGA HOLDINGS BHD [], KOSSAN RUBBER INDUSTRIES BHD [], TOP GLOVE CORPORATION BHD [] and SUPERMAX CORPORATION BHD [] -- fell for the second straight day after rubber prices rose and ringgit firmed further.

At 3.46 pm today, Hartalega fell 22 sen or 3% to RM7.06 on volume of 370,700 shares while Kossan slipped 21sen or 3.1% to RM6.47 with 1.1 million shares exchanging hands. They were the second and third top losers respectively.

Top Glove and Supermax also continued their slide. Top Glove shed 3 sen or 0.48% to RM6.24 with 499,300 shares changing hands, while Supermax slid 10 sen or 3.9% to RM2.48 on trades of 5.8 million shares.

Rubber prices yesterday climbed 7.5 sen or 0.9% to stand at 780.5 sen per kg. Higher rubber price would constitute higher raw material costs for the glove companies.

Yesterday, JF Apex Securities research analyst Soon Wei Siang cited the firming of the ringgit and rise of rubber prices as reasons for the fall of the stocks, apart from valuation of the stock.

In mid-week, Alliance Research downgraded the glove sector due to limited price upside after the four rated stocks under its research coverage had risen by 50% in the past nine months.

The fall came despite a rise in the broad market, boosted by US Fed decision on quantitative easing. At midday break today, the FBM KLCI remained in positive territory.

“The market has brightened up now and I believe investors who have held defensive glove stocks when market outlook was uncertain previously are off-loading to take profit now,” said Soon of JF Apex.

Alliance’s analyst Ian Wan had said in his report: “While we believe the sector’s fundamentals remain intact, we see limited upside going forward following the strong year-to-date performance.”