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I am not sure the vaccine is useful or not. CEO have better answer.

Do you have to wear GLOVES to give a vaccine shot?

I am holding my GLOVES. I will only sell when ASP come down but not stock price come down.

I buy vaccine logistic by using the GLOVEs profit as hedging to vaccine news.

• I am buying more FREIGHT after I read Group MD Chew Chong Keat interview
• How to distribute the ultra-cold vaccine? I am allocating my GLOVE profit to TASCO Cold Chain to hedge vaccine news
• How to distribute the ultra-cold vaccine? I am allocating my GLOVE profit to FREIGHT to hedge vaccine news
• KGB's dry ice plant to flourish from Pfizer's vaccine success?

I am reproducing The Star article to my blog.

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Compile here for my own record.

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https://www.thestar.com.my/business/business-news/2020/12/29/top-glove-confident-of-robust-demand-over-next-two-years

• Corporate News

• Tuesday, 29 Dec 2020

PETALING JAYA: Top Glove Corp Bhd’s average selling price (ASP) is expected to jump 30% quarter-on-quarter in the second quarter of 2021, on the back of higher volumes from new capacities and product mix skewed towards higher margin nitrile gloves.

Kenanga Research in a report said Top Glove management is confident of robust demand over the next two years due to continuous acute shortage and surging Covid-19 cases in Europe and the US.

“Case in point, the US’ stockpile dropped from 16.9 billion pieces in December 2019 to two billion pieces in October 2020. Post Covid-19, inventory restocking cycle is expected to spur demand, coupled with increased usage arising from new user groups and increased hygiene awareness.

“Looking ahead into the second quarter of 2021, we highlight that Top Glove’s ASP in the second quarter of 2021 is expected to jump by 30% quarter-on-quarter, with higher volumes from new capacities and product mix skewed towards higher margin nitrile gloves.”

Kenanga Research said efforts to source for more worker accommodations and to improve existing ones have been ongoing, for which the group has already invested RM70mil.

“In addition, the group has spent RM20mil purchasing 100 units of apartments over the past two months and is also renting more houses for its workers.

“Over the medium term, the group has earmarked about RM100mil to be invested in workers’ facilities and accommodation, which includes building mega hostels in Klang and Banting with a combined capacity of 7,300 pax fully equipped with a suite of amenities and facilities.”

The research house said that so far, 8,357 workers or 94% of those tested positive and have recovered or tested negative are ready to resume work.

“Presently, its Klang factories’ utilisation is slowly ramping up with the reopening of all 28 factories.”

Kenanga Research also highlighted that there had been environmental, social and governance (ESG) issues concerning Top Glove lately.

“Top Glove has been in the spotlight due to its workers’ housing conditions and high Covid-19 infections that led to the implementation of an enhanced movement control order.

“On Nov 23, the government announced that 28 of Top Glove’s factories in Klang will temporarily cease operations in stages to allow the factory workers to undergo screenings and mandatory quarantine in an effort to contain the spread of the virus among the employees.

“Despite earnings on a strong growth track in 2021, concerns over ESG issues could potentially de-rate the stock.”

As such, the research house is cutting its target price from RM10.68 to RM8.50, based on the stock’s revised 9.1-times unchanged 2021 earnings per share.

Kenanga Research is also attaching a 20% discount to its target price-to-earnings ratio to take into account ongoing concerns over ESG-related issues, particularly those related to its foreign workers.

“Moreover, re-emergence of Covid-19 cases in the future could cause temporary disruption in production.”