Furniture and glove makers winners in US-China trade war

Inari, VS Industry and Globetronics continue to provide compelling values despite the market perceiving them to be losers.

KUALA LUMPUR: Malaysian’s furniture, wood-based panel and glove makers are potential winners if the 10% import tariff on more than 5,000 new Chinese imports is set in motion in the US-China trade friction.

UOB Kay Hian Malaysia Research said on Friday the on-going spat may just negatively affect the technology and electronics manufacturing services (EMS) sectors (exporters).

“Nevertheless, Inari, VS Industry and Globetronics continue to provide compelling values despite the market perceiving them to be losers,” it said in its strategy report.

To recap, last week, the US Government upped the ante on the trade war dispute with China. In a fresh attempt, Trump’s Administration is looking to impose a 10% tariff on more than 5,000 new Chinese imports worth US$200bil.

This threat followed after China fought fire with fire - the US slapped 25% tariff on US$34b of Chinese goods and Beijing reacted tit-for-tat by matching tariffs on the same amount of US products. 

UOB Kay Hian Research noted that nonetheless, the conflict seems to have recently abated, seeing how ZTE’s case was resolved.

The research house said the US and China make up 24% of Malaysia’s total export value. Based on ranking, China (13%) is Malaysia’s second biggest export partner followed by the US (9%). 

After vetting through the list of items that may be slapped by a 10% tariff, the research house identified sectors which could benefit from the recent US trade tantrum. 


Within the furniture space, Lii Hen Industries and Latitude Tree Holdings are two stocks which caught the research house’s attention considering 70%-90% of their sales are directed to the US.

Furthermore, both have solid balance sheets with a net cash position, making up 10%-20% of their corresponding market capitalisation. Valuation wise, they are trading at less than 10 times price-to-earnings (PE) while offering commendable dividend yields of more than 3%.

Wood-based panel makers

For wood-based panel makers, potential beneficiaries would be Mieco Chipboard, Evergreen Fibreboard, and HeveaBoard. 

That said, the US forms only less than 10% of their total sales. Among them, HeveaBoard has the sturdiest financial position with a net cash pile of RM23mil (5% of its market cap) while Mieco and Evergreen have net gearings of 0.6 times and 0.1 times respectively. They trade at an average PE of 12 times.

Glove makers

In the rubber glove sector, possible winners (but receiving only minimal spillover benefits) are Top Glove, Hartalega, and Kossan. About 25%-50% of their sales are fueled by the North American region. 

However, consumers are mostly nitrile glove users (the trio produces this) while vinyl gloves were targeted for import tariffs instead. On a larger scale, the risk-reward profiles for these stocks are unfavourable as valuations are stretched at more than two standard deviation above their five-year mean PE.


Subscribe now for a chance to win your dream holiday!

Monthly Plan


Annual Plan


Billed as RM148.00/year

1 month

Free Trial

For new subscribers only

Cancel anytime. No ads. Auto-renewal. Unlimited access to the web and app. Personalised features. Members rewards.
Follow us on our official WhatsApp channel for breaking news alerts and key updates!

Next In Business News

Oil settles down on weaker US consumer sentiment
China’s exports top forecasts but falling imports point to more stimulus
Lessons from Malaysia’s Silver State
UK emerges as haven from global storms
Empowering SMEs in their digital transformation
Holistic approach to developing data centres
Sunview gains momentum on booming solar sector
Carbon tax conundrum
Robust plans needed to spur high-skilled jobs
Synergy House brings innovation to the table

Others Also Read