Is Top Glove’s listing on SGX a threat to Singapore glovemakers?

They’re trading at a 35% discount in terms of forward P/E.

Singapore glovemakers are going to benefit more from Top Glove’s secondary listing on the Singapore Exchange (SGX) than Top Glove itself.

According to a report by Maybank Kim Eng, Top Glove intends to explore with its substantial shareholder the sale of about $20m worth of shares on SGX. The exercise is expected to complete by 3Q16, and no new shares will be issued.

Maybank notes that this move will hardly help to boost Top Glove’s liquidity as there is ample liquidity in Malaysia. IHH’s trading volume, for instance, has remained low in Singapore since its dual listing in 2012. Beneficiaries will be the investment bankers and perhaps the substantial shareholder that will be selling its stake.

It’s a different story altogether for SGX-listed glovemakers, though. This could pan out well for them as they are trading at a notable discount of about 35% in terms of forward P/E versus the Malaysia-listed glovemakers. This is on back of lack of understanding, having only a small cluster of glove stocks listed in Singapore and less news flow.

Moreover, Malaysia has seven listed glove stocks, while Singapore only has two. With Top Glove’s secondary listing, Maybank predicts more news flow and perhaps more glovemakers listing on the SGX.

“It makes sense since the glovemakers export globally and Singapore fits in as a widely recognised financial hub and politically stable nation,” reports Maybank.