Malaysia is home to some of the largest rubber and nitrile glove manufactures in the world. Bursa Malaysia, the stock exchange of Malaysia, is also home to many of them.
Companies such as Hartalega Holdings Berhad (KLSE:5168.KL), Kossan Rubber Industries Berhad (KLSE:7153.KL), Supermax Corporation Bhd (KLSE:7106.KL), and Top Glove Corporation Bhd (KLSE:7113.KL) are all based in Malaysia, listed in the country, and major players in the rubber and nitrile gloves industry.
Over in Singapore’s stock market, for a long time, Riverstone Holdings Limited (SGX: AP4) was the only major rubber gloves manufacturer that was listed. But, Top Glove had recently decided to have a secondary listing in Singapore too; its shares started trading in late June. Would this development result in more glove manufacturers in Malaysia choosing to list in Singapore in the future?
Top Glove is the largest rubber gloves manufacturer in the world in terms of production capacity. The company has also been one of the best-performing stocks in Bursa Malaysia over the past decade, chalking up a total return of 270% with dividends reinvested.
With the intense competition now in the rubber gloves industry, Top Glove is looking to expand into other products. Recently, the company announced that it is planning to buy a condom manufacturer. The acquisition might be another growth engine for the company but it won’t come cheap – Top Glove might need to raise up to RM1 billion for the acquisition.
Now that the firm is listed in two exchanges – in Malaysia and Singapore – its ability to raise funds has certainly improved.
Given the added flexibility when it comes to raising capital, would other leading glove manufacturers follow in Top Glove’s direction and start planning for a secondary listing in Singapore as well? And if so, are investors in Singapore interested in them?
Even if some of these companies want to diversify their investor base and attract more investors from outside Malaysia, there might be a challenging road ahead.
Top Glove’s shares have been listed in Singapore for less than two weeks, so it’s still early days. But, the initial response is that investors in Singapore do not seem to be interested in the gloves manufacturer as an investment – there have been hardly any shares traded after the trading debut.
If I were to look at Riverstone Holdings, which has been listed in Singapore for close to a decade, the volume of shares that has been traded has not grown much since its listing. And, this has happened even when the company has been one of the best best-performing stocks over the past 10 years, chalking up a total return of more than 870% since its November 2006 IPO (initial public offering).
The rubber gloves industry has companies that could be great investment opportunities. But, for investors to be comfortable investing in a certain industry, a huge amount of effort in educating investors about the industry and companies within is required. At the moment, it does seem that not many investors are comfortable with investing in the rubber gloves industry.
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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore writer Stanley Lim doesn’t own shares in any companies mentioned.