Comfort Gloves on uptrend despite industry headwinds

  • Business
  • Wednesday, 13 Nov 2019

KUALA LUMPUR: As multiple headwinds continue to hit the rubber glove sector, a relatively small player in the industry does not seem unduly worried as it continues to record healthy growth levels.

While some of the big boys are recording declining earnings with major issues such as global demand, COMFORT GLOVES BHD has been on the uptrend, as far as its first half figures are concerned.

It may even kickstart its expansion plan as early as the first half of next year, on its land in Perak that it acquired last year.

According to Comfort Gloves executive director Sean Cheang, the group is not immune to the present headwinds, but rather, it deals in specialised segments, differing itself from the giants such as Hartalega Holdings Bhd and Top Glove Corp Bhd.

“It is impacted, make no mistake but from the demand side. What affects the bigger players doesn’t necessarily affect us because we’re playing in different markets and have different sets of customers.

“But we still think that our segment, which is a more specialised one...not to say that it’s immune but it’s usually more robust, ” he said.

Cheang added that looking at the industry as a whole, conditions are challenging with a lot of headwinds currently and industry players in Malaysia especially, are facing labour shortage issues involving foreign workers.

Comfort Gloves has just completed its third quarter ended Oct 31, of which Cheang said solid results are expected.

The group’s financial performance has been quite stellar this year with a 35.71% jump year-on-year (y-o-y) in net profit to RM15.53mil for its first half ended July 31. Its financial year-end is Jan 31.

Its focus for the next financial year would be the expansion of its capacity with its 38.92-acre parcel of land in Perak, which would theoretically have a capacity of three times its current size, footprint-wise.

It produces some 380 million to 400 million pieces of gloves monthly at the moment, out of which 85% are nitrile and 15% latex.

“We have great prospects to really expand fast, but of course, it all depends on the climate. There are certain resistant factors, obviously labour being a key one.

“Availability and timing, those are the biggest components of how quickly we can move forward.

“We envision being able to spend five years to grow out in a very disciplined manner to fully utilise the 38 acres, ” Cheang said.

The group currently has three factories, all based in Taiping.

Cheang also revealed that the group would look at the decommissioning of equipment that is around 10 to 12 years old in nine production lines, and replacing it with new equipment that is more efficient and cost saving in terms of energy.

“The output is higher, so productivity will also be higher. From the labour perspective, for example, I imagine it would be 25% more productive with the new equipment, ” he said.

Commenting on the issue of oversupply that is affecting most industry players, Lau Joo Yong, who is also an executive director of Comfort Gloves, said most players do not get into the fairly niche segments it is in.

“A vast majority of the listed glove producers are more into the medical segment. We’re in multiple segments such as industrial, automotive, food industry, aviation, pharmaceuticals and life sciences.

“These are where our products are. And considering our size now, there’s still a lot of room for us to grow. Prospects wise, it is quite bright, ” said Lau, adding that demand was still as robust for those industries,

Cheang concurred, saying that Comfort Gloves is still relatively small within the industry and the group believes it can grow within its existing specialised portfolio without facing much challenge.

Among the challenges that Comfort Gloves is facing includes the volatility from the China and United States trade tensions.

“Malaysia, while a dominant glove player, still faces competition from China and Thailand and that scenario looks a bit tricky, ” Cheang said.

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