Monday, September 12, 2011

Glove makers slip as Top Glove gets downgraded

KUALA LUMPUR: Glove manufacturers declined in the morning trade session on Monday, Sept 12 after OSK Research said the world's largest rubber glove maker, TOP GLOVE CORPORATION BHD [], continued to be affected by external factors.

OSK Research had pointed to the still high latex prices and supply catching up with demand as the external factors.

At 12.30pm, Top Glove fell nine sen to RM4.50, Latexx and Supermax down eight sen each to RM1.42 and RM2.70, Hartalega four sen to RM5.56, Kossan three sen to RM2.77 and Careplus half a sen to 33.5 sen.

OSK Research on Sept 12 had downgraded Top Glove to Sell from Neutral and cut its target price to RM4 from RM5 previously.

OSK Research said the factors affecting Top Glove included latex prices that were still at a high RM8-RM9/kg, but that the company was able to pass on 70%-80% of the cost increase.

The research house also said supply had caught up with demand, which reduced Top Glove's bargaining power.

'This leads us to downgrade our FY11-12 forecast by 6%-20%,' it said.

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