Malaysia's Top Glove pledges bigger dividend as shares tumble

KUALA LUMPUR, Jan 4 (Reuters) - Malaysia’s Top Glove Corp , the world’s largest medical gloves maker, hiked its proposed dividend on Monday as its shares came under pressure from speculation the rollout of COVID-19 vaccines could hit demand for its products.

The company, whose shares rocketed last year as the pandemic took hold, said it would pay out 70% of earnings for rest of its financial year, covering its second to fourth quarters, up from the 50% planned previously.

This was “in consideration of the good profit performance and strong cash flow, and to reward its shareholders,” it said in a statement.

However, Top Glove shares fell as much as 14.5% to their lowest since the end of June, with smaller rivals Hartalega Holdings and Kossan Rubber Industries dropping as much as 14.2% and 13.3% respectively.

“Entering a new year, people are more hopeful that the pandemic is coming to an end, while in reality, we have not seen number of cases coming down,” said MIDF Research analyst Ng Bei Shan.

“We still need to see how effective the vaccines can be in large scale,” she added.

Ng said Top Glove’s dividend was already considered attractive due to the higher profits anticipated, even without the extra payout.

Glove makers have also come under scrutiny for their labour practices this year, with the U.S. Customs and Border Protection imposing a ban on two Top Glove subsidiaries in July.

Malaysian authorities recently stepped up inspections at glove manufacturing firms after COVID-19 outbreaks at Top Glove and Kossan Rubber. (Reporting by Liz Lee. Editing by Mark Potter)