Challenge for firms going into making face masks

  • Corporate News
  • Tuesday, 23 Jun 2020

An employee packages finished protective masks on the production line at the Taiwan Comfort Champ Manufacturing Co. plant in Taoyuan, Taiwan, on Friday, June 12, 2020.

PETALING JAYA: The declining prices of surgical face masks may pose a challenge for companies that are looking to venture or expand into the manufacturing of these masks.

While most face masks retail at a standard price of RM75 for a box of 50 pieces at pharmacies, there are some that are priced at a lower RM43 per box, particularly those that are imported from China.

A brief survey on e-commerce sites showed that surgical face masks are priced even lower than in-store prices, with some as low as RM23 for a box of 50 pieces.

Prior to the government’s fixing of a ceiling price for surgical face masks at RM1.50 apiece, surgical face mask prices peaked to more than RM100 for a box of 50.

According to UOB KayHian head of research Vincent Khoo, surgical face mask manufacturers will face tough competition amidst price wars and thin profit margins.

“Face masks are still widely used, given the ‘new normal’ of going out and about in public.

“The usage of face masks could spike, should there be a possible recurrence of the second wave of Covid-19 cases in Malaysia.

“However, in the event that a vaccine for Covid-19 is successfully produced, then the demand for face masks will fall, ” he said.

New Covid-19 cases reported locally have been on a plateau, hovering at an average of 19 cases a day since June 5 and not surpassing 50 cases a day.

Given the softening demand of face masks, public-listed companies that have expressed their intention or commenced investments into manufacturing surgical face masks may face a stumbling block in terms of the profitability of their business diversification.

Glove maker Top Glove Corp Bhd had kicked off its production of face masks on June 10.

In a previous report, Top Glove group managing director Datuk Lee Kim Meow expects the uptrend in sales of face masks and gloves to continue until the year-end and beyond 2020, as government bodies, embassies and non-governmental organisations like the World Health Organisation spend a lot more for prevention purposes.

Lee had noted that the profit margin from manufacturing face masks is good due to lower raw material price.

However, going forward, the price of face masks could decline to as low as 80 sen per piece.

An analyst opined that surgical face mask manufacturers could still make decent profits despite the potentially lower retail price.

“There is insufficient stock in the market for well-known surgical mask brands, which are sought after for their quality and compliance assurance. Hence, there is still demand for high-quality surgical masks, ” the analyst said.

Among public-listed companies that have recently announced ventures into making face masks are lingerie manufacturer Caely Holdings Bhd, plastic product manufacturer SCGM Bhd, precision component maker Notion VTEC Bhd as well as tourism and property development firm Iconic Worldwide Bhd.

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