Glove sector’s earnings seen to remain intact

Kenanga Research said the recent round of reporting season for glove makers suggested that the ASP and margin trends had softened faster-than-expected and would likely continue to remain weak over the next two quarters. “Due to over-ordering over the past 15 months since the pandemic started, the market is currently undergoing a phase of inventory adjustment, signalling an acceleration in overall market ASP normalisation.”

PETALING JAYA: Local glove manufacturers’ 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, say analysts.

Despite the consensus on glove players’ earnings estimates to remain elevated, RHB Research believes that the market has already priced in the earnings weakness ahead of the consensus.