PETALING JAYA: BIMB Securities Research is adopting a cautious stance on the rubber glove sector’s short to medium-term outlook.
“We view the recent United States tariff hike on Chinese products positively, as it could provide Malaysian rubber glove manufacturers with a competitive advantage by making Chinese gloves less price-competitive in the US market.
“However, we remain cautious about China diversifying into non-US markets, which could heighten competition for Malaysian producers.”
Additionally, the research house said the rubber glove industry continues to face oversupply issues.
“While demand remains steady in some regions, there is still a lack of catalysts for strong growth in the near term.
“Ongoing raw material price fluctuations and market volatility further complicate the outlook, leading us to adopt a cautious stance on the sector’s short to medium-term outlook,” said BIMB Securities Research.
The brokerage has downgraded its call on the sector to “underweight” from “neutral” as it believes the industry’s outlook remains under pressure by ongoing structural issues, adding that a recovery to pre-Covid-19 levels is not expected in the intermediate term.
It has a “hold” call on Top Glove Corp Bhd
with a target price or TP of RM1.14 and a “sell” call on Hartalega Holdings Bhd (TP: RM2.90), Kossan Rubber Industries Bhd (TP: RM2) while Supermax Corp Bhd is “non-rated.”
BIMB Securities Research noted that for the third-quarter 2024, earnings showed three rubber glove companies under its coverage, namely, Top Glove, Kossan and Supermax, fell short of its in-house estimates while Hartalega met expectations.
On a quarterly comparison, BIMB Securities Research said revenue showed improvement, but earnings were weighed down by foreign-exchange losses which impacted the overall performance of the top-four rubber glove players.
