(Updated)

Top Glove rises as much as 10% after getting nod to resume exporting gloves to US

Top Glove rises as much as 10% after getting nod to resume exporting gloves to US
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KUALA LUMPUR (Sept 10): Top Glove Corp Bhd’s share price rose as much as 10.3% in Bursa Malaysia morning trade today after the rubber glove manufacturer said it is now allowed to resume exporting disposable gloves to the US.

At noon market break, the company’s share price had pared some of its gains, but still managed to climb nine sen or 2.65% to RM3.49, after some 40 million shares were traded so far. The stock had earlier risen to a high of RM3.75.

However, year to date, the counter saw a decline of 36.55% after the rubber glove industry was hit with dropping average selling prices (ASPs), overcapacity and slowdown in orders.

Earlier today, Top Glove announced that it has been cleared and is now allowed to resume exporting and selling gloves to the US after the US Customs and Border Protection (CBP) lifted its ban against disposable gloves made by the world's largest medical glove maker, effective today.

The US CBP affirmed that based upon additional information, products by Top Glove are no longer in violation of its laws.

The US previously banned disposable gloves made by Top Glove since July 2020, saying in March it had sufficient information to determine labour abuses at the company.

In a note today, TA Securities equity research analyst Tan Kong Jin said the removal of the ban will boost Top Glove's revenue, which has suffered since shipments to the US halted temporarily. 

He noted that the North American market accounted for just 8% of Top Glove's sales during 3QFY21 as compared to 23% in 2QFY21.

"Besides that, the upliftment may result in a slower decline of its ASP, given that ASP for the US market is about 5%-8% higher than the other countries. More importantly, the upliftment will improve its social/labour issues as well as reputation among customers," he added. 

However, TA Securities reduced Top Glove's earnings estimates after cutting its sales volumes and ASP assumptions. 

As such, TA Securities lowered Top Glove’s target price to RM3.22 per share, previously RM4, but maintained its "hold" call on the stock. 

Read also:
Top Glove cleared to resume business with US
Glove makers rebound as US CBP lifts import ban on Top Glove

Surin Murugiah