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MarketScreener Homepage  >  Equities  >  BURSA MALAYSIA  >  Top Glove Corporation Bhd.    TOPGLOV   MYL7113OO003

TOP GLOVE CORPORATION BHD.

(TOPGLOV)
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Asian rubber prices soar on supply woes, COVID glove shortage and China tyre demand

10/30/2020 | 03:52am EST

TOKYO/SHANGHAI Oct 30 (Reuters) - Rubber prices have rocketed to their highest in over three years as protective glove demand surges due to the COVID-19 crisis and industrial use rebounds in China, while supplies remain tight with producers struggling to replenish stocks.

Output across Southeast Asia - which accounts for more than two-thirds of natural rubber supplies - has been hit by coronavirus-related labour shortages as well as floods and unfavourable weather in Thailand and Vietnam.

Recent data has underscored the depth of the supply-demand gap that traders now worry could be exacerbated by unrest in key producer Thailand.

"Speculation that escalating confrontation between the authorities and anti-government protesters in Thailand may cause supply disruptions have also fuelled concerns over tighter supply," said Shinichi Kato, president of rubber material dealer Shinichi Kato Office.

Rubber futures on Japan's Osaka Exchange hit their highest levels since February 2017 on Thursday, having jumped more than 40% since late September.

The most-active rubber contract on the Shanghai futures exchange is also at three-year highs and up 26% for the year to date. Markets in Singapore and Thailand have also seen steep rallies.

Global rubber glove demand has climbed more than 20% this year to 360 billion pieces due to the coronavirus pandemic - by far the largest annual jump on record, according to Malaysia's rubber glove manufacturers association (MARGMA) and the Bangkok-based Economic Intelligence Centre.

"We think demand for rubber gloves will keep rising as long as there is no vaccine for COVID-19. For the remaining two months of the year, demand is still soaring," said Kanyarat Kanjanavisut, senior analyst at Economic Intelligence Center.

Malaysia, a rubber glove manufacturing hub that is home to world leader Top Glove, saw its glove exports soar 48% in the first half, MARGMA said, adding that it expects the global glove shortage to stretch into the first quarter of 2022.

"The demand for latex for gloves is so strong that it is depriving rubber users of supplies for other products such as tyres," said a trader at Singapore-based rubber trading company.

Production woes have meant output across Thailand, Indonesia and Malaysia is set to shrink 9.8% this year, according to the International Tripartite Rubber Council.

Thailand's benchmark physical RSS3 rubber sheet prices <RUB-RSS3C-BKK> are up 76% this year and 36% in October alone.

"It's worrying that rubber output this month will not be enough to match the growing demand of foreign markets," Rubber Authority of Thailand Governor Nakorn Tangavirapat said.

A recovery in China, which has largely contained the coronavirus, is also tightening supplies with the world's No.2 economy expanding 4.9% on the year in the third quarter.

"Strong orders from Chinese tyre makers ... have squeezed physical supplies, boosting prices especially in near-term contracts," said Kato.

China auto sales marked a sixth straight month of gain, rebounding a solid 12.8% in September.

"We keep an optimistic view about China's tyre demand for the next three months as local heavy truck sales have maintained a year-on-year growth of 50-60% while sales of passenger cars showed annual growth of 5-10%," an analyst at CITIC Futures said.

($1 = 31.2700 baht)

(Reporting by Yuka Obayashi in Tokyo, Emily Chow in Shanghai, Liz Lee and Mei Mei Chu in Kuala Lumpur, Patpicha Tanakasempipat in Bangkok and Naveen Thukral in Singapore: Additional reporting by Aaron Sheldrick; Edited by Gavin Maguire and Edwina Gibbs)


© Reuters 2020
Stocks mentioned in the article
ChangeLast1st jan.
CITIC LIMITED 0.16% 6.18 End-of-day quote.-40.69%
CITIC SECURITIES COMPANY LIMITED -0.70% 31.08 End-of-day quote.22.85%
TOP GLOVE CORPORATION BHD. -1.62% 6.68 End-of-day quote.326.38%
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Financials
Sales 2021 19 226 M 4 718 M 4 718 M
Net income 2021 8 541 M 2 096 M 2 096 M
Net cash 2021 2 142 M 526 M 526 M
P/E ratio 2021 6,26x
Yield 2021 8,16%
Capitalization 53 634 M 13 154 M 13 162 M
EV / Sales 2021 2,68x
EV / Sales 2022 3,96x
Nbr of Employees 21 000
Free-Float 57,9%
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Mean consensus OUTPERFORM
Number of Analysts 21
Average target price 9,82 MYR
Last Close Price 6,68 MYR
Spread / Highest target 140%
Spread / Average Target 47,1%
Spread / Lowest Target -19,2%
EPS Revisions
Managers
NameTitle
Kim Meow Lee Managing Director & Director
Wee-Chai Lim Executive Chairman
Chong Ban Wong Chief Operating Officer
Say Keong Liew Senior General Manager-Finance
Han Boon Lim Senior Independent Non-Executive Director
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