HONG KONG (Reuters Breakingviews) - Rubber glove makers have rivalled Zoom Video Communications as a popular pandemic trade. A quadrupling in the shares of Malaysia’s Top Glove, the world’s largest producer, values it at $13 billion. Yet its shares have fallen one-third since its $19 billion October peak, leaving it trading at multiples far below even its pre-pandemic average. As investors rush to take profit on Covid-themed trades, they can leave value on the table.

Top Glove, founded almost 30 years ago, accounts for one in four pairs of rubber gloves sold globally, its website claims. Last week it reported a 300% rise in sales in the quarter to Nov. 30 while net profit rose more than 20-fold to 2.4 billion ringgit ($592 million). This comes despite big setbacks. In July U.S. authorities banned imports from some factories over forced labour concerns. Some factories only re-opened this week after a month-long shutdown due to internal outbreaks. Neither issue dented its bottom line much. Most production was moved to U.S.-compliant sites, and the outages squeezed prices higher.

Like Zoom, Top Glove peaked on Oct. 19 after Pfizer said it was close to filing for vaccine approval. Its cheap valuation suggests investors are treating the typically defensive sector like a cyclical one as vaccines arrive. But testing and inventory re-stocking will continue in the short-term and even beyond 2021, so it is plausible that industry growth will remain above its pre-2020 8% a year. Top Glove expects demand to rise 20% in its financial year to Aug. 31 and 25% the year after. A shift in countries’ use of protection could also lift demand. Before the pandemic China used fewer than 10 pairs of gloves per person a year, compared to over 100 in the United States, per Citigroup analysts.

Top Glove’s shares are trading at five times 2021 forecast earnings and a 2022 multiple of nine times – far below its 10-year average of 18 times. The company is working on a Hong Kong listing next year, which could raise more than $1 billion to fund expansion. Investors may have moved on too soon.