Declining profits ahead for glove makers

In recent conference calls with analysts, both Hartalega and Top Glove have guided for lower ASPs in the coming months. Intensifying competition among the existing and new players (especially the rapidly-expanding China glove producers) could further pressure ASP.

KUALA LUMPUR: Maybank Investment Bank Research has downgraded the glove sector to neutral on concerns of declining average selling price (ASP) trend and lack of strong catalysts over the medium term.

“We are changing our valuation method from discounted cashflow (DCF) to price-to-earnings ratio (PER) multiple. We downgrade Kossan to hold while maintaining our buy on Hartalega and Hold on Top Glove, ” it said on Friday, adding its preferred exposure to the sector is Hartalega.