Demand for gloves remain strong despite negative sentiment

KUALA LUMPUR: Sentiment for the glove companies has turned negative, accompanied by the flurry of news revolving Covid-19 vaccines, MIDF Research said.

But the firm said its channel checks had revealed that demand for gloves remained strong with positive momentum for average selling prices.

Delivery time for nitrile gloves from Top Glove Corp Bhd particularly was expected to be more than one year, it added.

“All things considered, we believe that Top Glove is on track to deliver record results in financial year 2021,” MIDF Research said in a report today.

“We acknowledge that considerations on environment, social and governance (ESG) weigh higher in sustainable investing. The past issues Top Glove encountered had somewhat dampened some of its ESG aspects and we opine that the company may need some time to rectify them,” it added.

Top Glove, the firm said, had committed to, among others, improving its employees’ accommodation by setting aside budget to buy and build better housing for them.

MIDF Research said it was “positively” surprised by Top Glove’s announcement to increase its dividend payout ratio from its usual 50 per cent to 70 per cent for the next three quarters.

“This is higher than the 56 per cent payout ratio announced in December in conjunction with the release of its first quarter 2021 results.

“We believe that Top Glove will still be able to fulfil its capital requirements even with the higher payout ratio considering its improving operating cash flow.”

Hence, the firm has increased its dibidend per share assumption to 69 sen from 55 sen previously.

This translates into a dividend yield of 12.5 per cent for FY2021.

Source: NST