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Top Glove up as investors bet on ringgit
by hlk Thu 06 Oct 2011, 00:46
Shares of Malaysian glove manufacturer Top Glove rose as much as 7.1 percent on Wednesday as investors made bets that a weaker ringgit would boost the company’s earnings.
The ringgit has been weakening against the dollar since Sept. 8 and has depreciated by 6.25 percent in that time.
A stronger ringgit hurts glove makers, which depend almost entirely on exports for their business. Other glove manufacturers such as Latexx Partners and Supermax were also up 2.6 percent and 3.7 percent, respectively.
Despite investor enthusiasm, Maybank IB Research analyst Lee Yen Ling cautioned that the rally may be short lived as fundamentals were still weak.
“Though share price has rebounded on the weaker ringgit vis-à-vis US dollar, we would continue to avoid Top Glove as the negative impact of lower demand for its latex glove outweighs the positive impact of a stronger US dollar,” she said in a note.
Maybank IB has retained its sell call on the stock with a target price of RM3.40 (US$1.063) per share.
Top Glove shares were up 2.4 percent at RM4.36 at 0222 GMT, compared with a 0.7 percent rise in the broader market. -- Reuters
The ringgit has been weakening against the dollar since Sept. 8 and has depreciated by 6.25 percent in that time.
A stronger ringgit hurts glove makers, which depend almost entirely on exports for their business. Other glove manufacturers such as Latexx Partners and Supermax were also up 2.6 percent and 3.7 percent, respectively.
Despite investor enthusiasm, Maybank IB Research analyst Lee Yen Ling cautioned that the rally may be short lived as fundamentals were still weak.
“Though share price has rebounded on the weaker ringgit vis-à-vis US dollar, we would continue to avoid Top Glove as the negative impact of lower demand for its latex glove outweighs the positive impact of a stronger US dollar,” she said in a note.
Maybank IB has retained its sell call on the stock with a target price of RM3.40 (US$1.063) per share.
Top Glove shares were up 2.4 percent at RM4.36 at 0222 GMT, compared with a 0.7 percent rise in the broader market. -- Reuters
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