$Top Glove (BVA.SG)$ Maybank has upgraded the Malaysian glov...
Maybank has upgraded the Malaysian glove sector rating from "negative" to "positive", which the research house considers a "contrarian rating".
The upgrade comes in view of improving sales volumes and stabilising raw material prices, said Maybank, despite ongoing challenges of stiff competition.
"While sales volume remains volatile with a shorter order lead time as buyers are in no rush to lock in a contract due to excess supply in the glove market, sales volume has improved significantly quarter on quarter among the Malaysian glove makers," observed analyst Wong Wei Sum in a report.
He foresees plant utilisation rates to grow from the current range of 35 per cent to 40-45% to more than 35% to 45-50%, leading to lower production costs ahead.
Noting that raw material prices began stabilising after surging in Nov 2023, Wong is also expecting glove makers' natural gas costs to come down potentially from mid-2024, after spiking in Q1 2024.
This will cushion the impact on glove makers' bottom line financials and make pricing more competitive for them, he added.
With the sector rating upgrade, Maybank has also raised its ratings for rubber glove manufacturers Hartalega and Kossan Rubber Industries to tactical "buy" calls from "hold" previously.
The research house also raised its price target for Hartalega to RM3.02 from RM2.25, and to RM2.12 from RM1.59 for Kossan Rubber.
It maintains its "hold" rating on Top Glove but lifted its target price to RM0.80 from RM0.77 to reflect an improved earnings outlook.
"We believe the stakes in this competitive landscape rest on the hands of China's glove makers, who wield significant influence due to their more-competitive costing and pricing strategies," said Wong.
"Having said that, not all purchase orders will necessarily go to China as buyers also implement risk management strategy; some purchase orders should be directed to the other markets, including Malaysia."
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HHHandsome : Need your opinion, if I want to join medical family now, which one should I join ? In short term
bullrider_21OP HHHandsome: You are very late now. They may pull back soon.
bullrider_21OP HHHandsome: I recommended buying very early on.
HHHandsome bullrider_21OP: Haha.... I know, wait for next round see after medical, who will be the next. Construction, oil, tech or others
bullrider_21OP HHHandsome: Maybe Top Glove can buy around 0.26, sell around 0.275. For Parkson and Acesian, may have to wait weeks before they rally.
HHHandsome bullrider_21OP: Thank you sir
bullrider_21OP HHHandsome: NP