Rubber Products (Gloves, Condoms etc)

[winston]

Strong cash position should help glove makers ride out price war ahead, says HLIB Research

by Shazni Ong

“We also note that the pricing difference between the US market and the European Union market is also narrowing, at about US$5 now, as opposed to a US$10 gap earlier.

With ASPs declining faster than raw material prices, coupled with higher operating costs stemming from better social compliance practices and stricter standard operating procedures, Chua also observed that margins for glove makers are expected to be compressed further, not to mention that the impending price war arising from Chinese glove makers attempting to win market share could also exacerbate the situation further.

Source: theedgemarkets.com

https://www.theedgemarkets.com/node/600335

[behappyalways]

疫情趋缓供过于求 手套股回不去2020年盛况? | 八点最热报 28/12/2021
https://m.youtube.com/watch?v=PF19T2fhGps

[winston]

Glove sector’s earnings seen to remain intact

Operating margins are reverting back to the pre-Covid-19 levels, with their average selling prices (ASPs) trending lower from the US$28-US$30 (RM117-RM126) per-1,000-piece mark.

Major manufacturers are currently running at a 60% to 70% utilisation rate, with Kossan Rubber Industries Bhd being the exception at 75% to 80% currently.

Omicron could boost sales volume rather than ASPs.

The glove ASPs are also expected to trend lower by 3% to 5% month-on-month.

Source: The Star

https://www.thestar.com.my/business/bus ... ain-intact

[behappyalways]

Sector Of The Year: The collapse of glove stocks
https://www.theedgemarkets.com/article/ ... ove-stocks

[behappyalways]

Condom Sales Plunge 40% As World Tosses Rubbers Aside
https://www.zerohedge.com/economics/con ... bers-aside

[behappyalways]

Top Condom Maker Expects Sales To Shoot Up As Lockdowns Ease
https://www.zerohedge.com/markets/top-c ... downs-ease

[winston]

Affin Hwang IB maintains 'underweight' on rubber products sector, expects margins to deteriorate further

by Tan Siew Mung

Profitability in the latest results (for the fourth quarter ended Dec 31, 2021 or 4Q21) of the glove manufacturers was still at least two times higher than pre-Covid-19 levels.

The average ASP in 4Q21, which stood at US$25 (about RM104.62) to US$30 per 1,000 pieces, was still higher than US$20 to US$22 pre-Covid-19.

Other issues like a shortage of foreign labour and shortage of shipping containers.

Source: theedgemarkets.com

https://www.theedgemarkets.com/node/610226

[winston]

Gloves – Malaysia
4Q21: Upgrade To MARKET WEIGHT As Reward-to-risk Appears Balanced

4Q21’s ASP-led woeful earnings were further weighed by soft volume output.

Positively, the sector is expected to bottom over the immediate term.

Meanwhile, sector valuations are trading below -2SD of its pre-pandemic five-year PE mean.

While sentiment could decline in tandem with the sector bottoming out, we think downside risks to earnings have largely been factored in. Thus, the reward-to-risk payoff appears balanced at this juncture, prompting us to upgrade the sector to MARKET WEIGHT.

Source: UOBKH

https://research.uobkayhian.com/content ... dce59cc708

[winston]

Time to relook gloves?

By YVONNE TAN

UOBKH: the reward-to-risk payoff appears balanced at this juncture, prompting us to upgrade the sector.

Current ASPs of gloves in general, have reached pre-pandemic levels.

“We foresee prices to start climbing back up over the next couple of months even as the costs of other things like labour and natural gas remain high or move even higher”.

Fortress: “We expect further erosion of ASPs and also a (sales) volume decline after the high base observed last year”. Yong points out that there has been significant recent capacity addition, especially out of China.

“Buyers appear to be replenishing inventory now that ASPs are closer to the pre-pandemic range. A pick-up of utilisation rates towards 80%-90% followed by resumption of capacity expansion should signal the bottom for the industry. Sentiment is unlikely to improve until a bottom is found”.

In terms of existing sector valuations, it is at 16.9 times now, suggesting that there remains downside, as it is above the five-year price-to-earnings (PE) mean of 15.4 times.

“Raw material prices were generally on a downward trend, decreasing at a slower pace than ASPs, which resulted in margin compression".

“The group also had to contend with increases in other operating costs including utilities, manpower and chemical costs; as well as intensifying competition".

Source: The Star

https://www.thestar.com.my/business/bus ... ook-gloves

[winston]

Rubber glove export value to decline despite higher volume projected for 2022 on lower ASPs

by Shazni Ong

Expects the value of glove exports to shrink despite an expected 12% to 15% annual expansion in volume this year, due to lower average selling prices (ASPs).

We will be exporting more gloves, but our export revenue goes down.

Expecting a shortfall in the global supply of gloves by 5% to 10%, as China — the world’s second-largest manufacturer of the protective gear — contends with manufacturing disruptions caused by Covid-19 and erratic energy supply.

Rubber glove demand for this year is expected to hit 452 billion gloves — or 14,333 pieces per second — with Malaysia anticipated to produce the lion’s share at 294 billion pieces or 65% of all gloves, followed by China at 20%, Thailand at 10% and Indonesia at 3%.

US takes up 35% of our production output and Europe takes up the other 30% of the output.

Source: theedgemarkets.com

https://www.theedgemarkets.com/article/ ... e=malaysia