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Top Glove has spent RM1.28 billion on share buybacks since September 2020 and now its chairman Tan Sri Lim Wee Chai has picked up the baton by buying 4.28 million shares for RM29.77 million in his own capacity. With each purchase, the price of Top Glove shares keeps dropping.  Is Tan Sri Lim and his management stupid?  Does the biggest glove maker in the world not know what’s happening in the glove market?  Are they not aware of what the high priests of doom and the predatory IB’s have been braying about vaccines and the impending over-supply of gloves?

To answer the header question, let us first explore a few questions about the vaccine and the pandemic.  Unlike the seat-of-the-pants piece put out by JP Morgan, what you are about to read below is not based on the writer’s opinion but on those of knowledgeable experts.

Covid cases are rising exponentially and despite the introduction of vaccines, Bill Gates in a CNN interview last week said that the next 4 to 6 months could see the worst of the epidermic. 



We know that to stop the virus, we need to achieve herd immunity.  According to Lancet, the world’s most prestigious medical journal, widescale deployment of vaccines is not expected till end of 2021.  If distribution is efficient and proceeds smoothly it will take till 2024 for vaccination to achieve a high enough coverage (above 80%) to achieve herd immunity (go to:  https://www.thelancet.com/article/S0140-6736(20)32318-7/fulltext ).

At this time even the vaccine manufacturers do not know:

  1. how efficacious are the vaccines?  How will efficacy be affected by the evolution and mutation of the virus?
  2. how long will vaccine protection last?  Data on immunity to other corona virus suggest that immunity may be short lived in duration; less than 6 months
  3. how fast and how extensive can vaccine distribution be carried out and
  4. what will be the level of resistance or non-acceptance of the vaccine? 

Therefore, can herd immunity be achieved?

  1. Duration of immunity and efficacy are important in determining herd immunity
  2. The formula for calculating herd immunity is:  P = (1-1÷R₀)÷E,


P= the level of herd immunity as a proportion of the population

R₀ = Reproduction No. (the expected no. of secondary cases produced by a single infection}

E = Efficacy of vaccine

  1. If R₀ is 2.5 to 3.5 (as presently detected) and the vaccine is 94% efficacious, the level of herd immunity as a proportion of the population is 64% to 76%.  If efficacy is 86% (Chinese vaccine), the level of herd immunity required is 70% to 83% of population.  The lower the efficacy, the higher will be the level of herd immunity required.
  2. The efficacy numbers are based on Phase 3 trials, each involving up to 3000 participants.  Now that some vaccines have received regulatory approval, it will go into mass distribution (Phase 4).  Whether it will stay safe and what adverse events may occur down the road, we do not yet know.
  3. If side effects surface with wider use, the level of resistance to or non-acceptance of vaccine could be high.  With 20% non-acceptance and 86% efficacy, herd immunity may never be achieved
  4. Even now pregnant women, young children and people with allergies are discouraged from taking the Pfizer mRNA vaccine. 
  5. If countries do not reach high vaccine coverage levels, Covid-19 will become endemic but at a low level, the precise level depending on the degree of vaccine uptake, with peaks in winter and troughs in summer in the northern hemisphere.
  6. Taking into consideration all the above factors: hesitancy in accepting vaccine, unknown efficacy and side effects, limited protection duration and the insufficient distribution coverage, the pandemic may abate with the introduction of vaccine but the covid-19 endemic will persist in many parts of the world. 
  • As long as the virus persist, the world has to be vigilant against infection from human-to-human contact and formite transmission (transmission of virus via inanimate objects and surfaces), against which gloves are meant to prevent.


Top Glove’s Capacity Expansion & Forecast of Global Demand Growth

  • Top Glove, the largest manufacturer in the world has forecast that demand for gloves will grow by 25% in CY2021, and post covid, demand will grow by 15% (compared to 13.8% p.a. pre-covid).
  • It has planned its production capacity expansion to maintain its 26% market share.









World Demand Growth







World Glove Production (Billion)







TG's Production Capacity (Billion)





TG's capacity increase (%)





TG's Market Share (Projected)






Will the Global Glove Capacity Expansion lead to oversupply?

  1. The growth in global demand in CY2020 is estimated to be 20%.  Is the forecast of 25% increase in global demand an over-estimation and will the concomitant increase in production lead to oversupply?  The answer is NO!!
  2. As the number of active covid cases now is greater than in early 2020, the nature of exponential growth of infection means that, with a larger infection base, the number of infections will be greater in 2021 than in 2020.  Therefore the percentage growth in demand in 2021 will surely exceed the 20% growth in 2020 and may even exceed the forecast 25% increase.  If this happens, the planned increase in global production will not lead to oversupply.
  3. The initial roll out of vaccines will inevitably be slow and will not match the exponential rate of infection.  Right now, only the Pfizer vaccine has been approved by FDA.  The -70°C storage requirement will obviously limit its widespread distribution in tropical and poorer countries.
  4. To end the pandemic, the virus must either be eliminated worldwide, which most scientists agree is near-impossible because of how widespread it has become.  And to achieve the required 80% herd immunity will not be easy
  5. If immunity to the virus lasts less than a year, for example, similar to other human coronaviruses in circulation, there could be annual surges in COVID-19 infections through to 2025 and beyond
  6. In time, as with all products, supply will catch up with demand and an equilibrium price, higher than historical, will then prevail.  However, with the necessity to restock, and the time needed for new entrants to obtain FDA and CE certifications,  over-supply will not happen till 2022, and possibly beyond if Covid-19 is still not contained by then.
  7. In the last 20 years, there have been six significant threats - SARS, MERS, Ebola, avian influenza and swine flu.  We dodged five bullets but the sixth – Covid 19 -got us.  And this, according to many experts, will not be the last pandemic we are going to face.



So Tan Sri Lim and Top Glove must have had good advice on the pandemic situation and know that the gravy train is not ending yet. 

Following Top Glove’s announcement of Q1FY21 results, which saw record profits of RM2.4 billion, which is higher than Maybank and Public Bank, I decided to crunch some numbers based on TG’s guidance of 30% increase in ASP for the next quarter and 25% growth in glove demand for CY2021. 





TG Sales (RM Billion)



PAT (RM Billion)



No. of Shares






Mkt Price







The projected figures for FY2021 astound me.

  • PAT of RM15 billion could be achieved making TG the most profitable company in Malaysia ever!
  • At a PE of a mere 15x, TG’s share could be worth RM27 compared to the price today of RM6.41 and the JP Morgan’s ridiculous fair value price of RM3.50.  In a bull market at 25x PE, the price could reach RM45!

So Tan Sri Lim is not a fool after all.  Knowing what is coming, repurchasing TG shares at below RM8 is a no-brainer, a “pauchiak”, slam dunk decision! 

For all Top Glove investors, stay healthy and enjoy the big ang pow that could come in a couple of months. 


Disclaimer : This article is purely for the purpose of information and opinion sharing. You should not make your investment decision based on it and you are strongly recommended to seek independent verification and advice.


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