Rubber Products (Gloves, Condoms etc)

[behappyalways]

Glove stocks projected to see meaningful recovery only towards end-2024
https://theedgemalaysia.com/node/685359

[winston]

Chinese and Thai players undercutting M’sian firms

The situation may persist over the next 12 to 18 months.

Domestic glove makers are still being undercut by US$3 to US$4 per 1,000 pieces.

Hartalega has undergone the largest capacity cut.

Top Glove and Supermax may still have plenty of excess capacity to shed.

Upside risks for the sector are competitors raising average selling prices, which could result in potential sales volume returning to the local players; stronger-than-expected global glove demand; and prolonged weak ringgit versus the US dollar.

Source: The Star

https://www.thestar.com.my/business/bus ... sian-firms

[winston]

Glove bear JP Morgan turns bullish on Malaysian rubber gloves sector

By Surin Murugiah

"Overweight" ratings on Hartalega Holdings Bhd and Kossan Rubber Industries Bhd while retaining its "underweight" rating on Top Glove Corp Bhd.

In a note on Dec 27, the research house said the industry has witnessed a pick-up in demand following 2.5 years of inventory de-stocking.

JP Morgan said it values all players on 25 times 12-month forward earnings per share (price target end date December 2024).

Source: theedgemalaysia.com

https://theedgemalaysia.com/node/695421

[winston]

US tariff hike on Chinese products may augur well for Malaysian glovemakers

By Emir Zainul

Joe Biden raises the tariffs on Chinese rubber medical and surgical gloves from 7.5% to 25% in 2026.

With the tariff hike, Chinese gloves will be more expensive in about two years compared to now.

Malaysian glove industry has been operating at a low utilisation rate below 50% due to an enduring oversupply of gloves, while the overall sales volume has declined year-on-year. In contrast, Chinese glove players are still running at near full capacity.

Chinese players are currently selling about US$2 (RM9.47) per 1,000 pieces cheaper than their Malaysian counterparts, pricing their products at US$16-US$18 per 1,000 pieces.

Source: theedgemalaysia.com

https://theedgemalaysia.com/node/711588

[winston]

Gloves – Malaysia
Plot Twist From Escalating US-China Trade Tension

The precipitous tariff hike announced by US authorities on China’s medical-grade gloves beginning 2026 is poised to revitalise investors’ sentiment on the Malaysian glove sector.

While the sector’s recovery plot continues to thicken beyond post-pandemic eclipsing earnings and demand moderation, we anticipate domestic glovemakers to progressively reclaim market share from China, sustaining concrete ASP trajectories and future margin upticks.

Maintain OVERWEIGHT.

Source: UOBKH

https://research.uobkayhian.com/content ... e=hs_email

[winston]

not vested

Glove makers to benefit from US tariff hike on China

Tariff hike could lead Chinese manufacturers to redirect their focus from the United States to European and Asian markets, which might benefit Malaysian companies in the short term​​.

HLIB Research presented two potential outcomes:
1. Where Chinese players do not lower their pre-tariff prices, allowing Malaysian players to increase their prices and narrow the price gap, and
2. Where Chinese players reduce their pre-tariff prices to remain competitive, maintaining market equilibrium and resulting in no significant market share gains for Malaysian players.

Hartalega Holdings Bhd and Kossan Rubber Industries Bhd, which have not been impacted by the US Customs and Border Protection’s withhold release orders and who possess competitive cost structures, will benefit the most from the anticipated trade diversions​​.

Source: The Star

https://www.thestar.com.my/business/bus ... e-on-china

[winston]

Gloves – Malaysia
Blooming In Spring

The Malaysian glove sector is officially out of the woods with anticipation of sequential earnings growth coming into fruition throughout 2024.

We have also observed a feasible trend of improving operating statistics from the past few quarters.

With this and the US’ precipitous tariff hike on China’s medical-grade gloves beginning 2026, we re-affirm our optimism that potential valuation re-rating may continue to catalyse the sector’s positive
share price trajectories.

Maintain OVERWEIGHT.

Source: UOBKH

https://research.uobkayhian.com/content ... e=hs_email

[winston]

Worst likely over for glove sector

By DANIEL KHOO

Source: The Star

https://www.thestar.com.my/business/bus ... ove-sector

[winston]

China site visit note
Intensifying competition; D/G to tactical POSITIVE

We are more cautious on the glove sector after our meetings and plant visits with major China glove makers last week, as we downgrade the sector to tactical POSITIVE (from POSITIVE).

While the short-term outlook (12 months) remains intact with the recovery in glove demand and stabilizing ASP outlook, the longer term outlook remains uncertain with expanding capacity from the Chinese glove makers.

Cost efficiency and technology are keys for M’sia glove producers.

We maintain earnings forecasts but lower our TPs by 4-23%. We D/G TOPG to HOLD while maintaining BUYs on HART and Kossan.

Risks to our calls & ratings
i) Capacity expansion from Chinese counterparts outside of China, allowing them to avoid tariff hikes imposed by the US government;
(ii) a more aggressive pricing strategy by Chinese glove makers, potentially resulting in lower market share for Malaysia glove makers;
(iii) aggressive capacity expansions by existing glove players;
(iv) hikes in raw material prices that cannot be fully passed on; and
(v) prolonged price wars and oversupply issues.

Source: Maybank

https://mkefactsettd.maybank-ke.com/PDFS/394738.pdf

[winston]

Christmas comes earlier

A boost to Malaysia glove makers competitiveness

We are pleasantly surprised by US’ final USTR modifications on China tariffs, which will raise tariffs on China-made medical and surgical gloves to 50% by 2025 and 100% by 2026 - well above the 25% proposed in May 2024.

This increase will make Malaysia gloves relatively cheaper, boosting their competitiveness in the US market.

We maintain tactical POSITIVE on the glove sector and expect earnings recovery in the next 12-15 months, before additional capacity from China’s overseas expansion picks up in 2026.

Our top BUYs are HART and KRI. We U/G TOPG to a tactical BUY.

Source: Maybank

https://mkefactsettd.maybank-ke.com/PDFS/406020.pdf