Rubber Products (Gloves, Condoms etc)

[winston]

not vested

Gloves – Malaysia US Raises China Gloves Tariffs In Protectionism, Trade Rivalries

A further precipitous tariff hike and earlier implementation timeline announced by the US authority on China’s medical-grade gloves are poised to revitalise investors’ sentiment on the Malaysian glove sector.

With the sector’s post-pandemic recovery eclipsing earnings amid demand moderation, domestic glovemakers should progressively reclaim market share from China, sustaining concrete ASP trajectories and margin upticks.

Maintain OVERWEIGHT.

Source: UOBKH

https://39646150.fs1.hubspotusercontent ... e=hs_email

[winston]

Tailwinds from more punitive tariffs on China

The modified import tariffs by USTR on Chinese gloves should translate into a surge in sales volume for Malaysian glove makers.

Top Glove CEO thinks any EPS upside could be capped by inventory dumping into non-US markets, stronger RM, and production constraints.

Reiterate Underweight on the sector.

Source: CIMB

https://rfs.cgsi.com/api/download?file= ... 120C85B92B

[winston]

Strong demand recovery expected for glove players

Strong demand recovery moving into the second half of 2024 and into next year, underpinned by inventory rebuilding from distributors and faster-than-expected industry consolidation.

“There are also signs that predatory pricing by certain overseas players have diminished as Chinese players’ utilisation has exceeded 90%.

US imposition of tariff ratcheting up to 50% and 100% in 2025 and 2026 respectively.

Uptick in orders over the past two quarters, with the rise in demand coming as the inventories of major distributors across all regions have returned to normal levels.

US historically accounts for 30% to 50% of the sales volume of Hartalega, Kossan Rubber Industries Bhd, Top Glove and Supermax Corp Bhd, while illustrating that a 50% tariff hike is expected to raise the average selling price of Chinese glove producers to US$25 per 1,000 pieces from US$19.

Source: The Star

https://www.thestar.com.my/business/bus ... ve-players

[winston]

Glove stocks a safe haven amid rising tariffs

By ELIM POON

Trump has vowed to impose a blanket tariff of up to 20% on every foreign import entering the United States, and a harsher 60% to 100% rate for Chinese goods.

The strengthening of the US dollar against the ringgit is also another plus for the local glove manufacturers given that they derived most of their earnings from exports.

Chinese glove makers in turn will start to look to markets where they would not be affected by tariffs like Europe and possibly Japan. However, Japan’s emphasis on quality would mean that they are likely to continue to prioritise orders from Malaysian glove manufacturers over Chinese suppliers,”.

There is also improvement in operational costs as seen in lower oil and chemical prices. As such, there will be some margin expansion for local glove companies as well,”.

Source: The Star

https://www.thestar.com.my/business/bus ... ng-tariffs

[winston]

Increased competition likely for glove manufacturers

we remain cautious about China diversifying into non-US markets, which could heighten competition for Malaysian producers.”

Additionally, the research house said the rubber glove industry continues to face oversupply issues.

Ongoing raw material price fluctuations and market volatility further complicate the outlook,.

The brokerage has downgraded its call on the sector to “underweight” from “neutral” as it believes the industry’s outlook remains under pressure by ongoing structural issues, adding that a recovery to pre-Covid-19 levels is not expected in the intermediate term.

On a quarterly comparison, BIMB Securities Research said revenue showed improvement, but earnings were weighed down by foreign-exchange losses which impacted the overall performance of the top-four rubber glove players.

Source: The Star

https://www.thestar.com.my/business/bus ... ufacturers

[winston]

Malaysia Gloves Sector 2025: A high stakes year

Recovery partially priced in; downgrade to NEUTRAL

Malaysia’s glove sector is recovering, driven by inventory replenishment since early-2024 and is set to benefit from a higher 50% US tariff on Chinamade gloves from 2025 and 100% from 2026.

This will boost utilisation rates and ASPs. However, risks persist from China rivals in non-US markets, their overseas expansion and potential higher US tariff extending beyond China-made gloves.

We D/G the sector to NEUTRAL (from tactical POSITIVE) after the recent share price rally. We maintain a BUY on HART but downgrade KRI to HOLD (from BUY) and TOPG to SELL (from HOLD). New contagious diseases outbreaks may offer trading opportunities.

Source: Maybank

https://mkefactsettd.maybank-ke.com/PDFS/426697.pdf

[winston]

Glove stocks rally amid reports of new virus infections in China, MIDF shrugs off potential demand spike

The seasonal influenza cases would not lead to a surge in glove demand inside and outside of China,” said MIDF Amanah Investment Bank.

Even if the outbreak becomes prevalent, Malaysian glove manufacturers may not benefit, as their Chinese rivals would have the capacity.

Source: theedgemalaysia.com

https://theedgemalaysia.com/node/739919

[winston]

not vested

Gloves – Malaysia A New, Different Beginning

While the Malaysian gloves sector charted an impressive turnaround in 2024 after the COVID-19 lows as expected, risk-reward appears less appealing currently as valuations are trading close to the historical mean based on 2025’s full earnings recovery.

Despite more optimism emerging following better operating matrixes and several rounds of catch-up upgrades by consensus, we believe that these have been fairly reflected in the recent share price movement.

Downgrade to MARKET WEIGHT.

Source: UOBKH

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

[winston]

Malaysian glove makers poised for US growth but broader tariffs may upend optimism

They may also face stiffer competition as Chinese rivals pivot from the US to markets in Europe and Asia, add analysts

by Megan Cheah

Source: Business Times

https://www.businesstimes.com.sg/compan ... d-optimism

[winston]

Too early to price in any potential glove oversupply risk

A Chinese glove maker is diversifying their manufacturing facilities to Indonesia.

Kossan and Hartalega fit the description as they have not been served with a Withhold Release Order (WRO) by US Customs and Border Protection before.

Source: The Star

https://www.thestar.com.my/business/bus ... upply-risk