Malaysia's Export Of Rubber Gloves To Outpace Global Demand Growth

KUALA LUMPUR, Sept 3 (Bernama) -- Malaysia's export of rubber gloves is expected to outpace global demand growth, largely on market share gains over rival countries like Thailand and Indonesia, said Affin Hwang Capital Research. It said Malaysia is the largest rubber gloves manufacturing country with more than a 63 per cent market share of the global glove supply. "The global dominance has its merits, as Malaysian manufacturers enjoy a competitive advantage in the form of lower energy costs due to state subsidies, while labour productivity remains favourable," the research house said. It said the Malaysia Rubber Glove Manufacturers Association expects exports to achieve a global market share of 65 per cent by 2020, which is not a tall order in its view. Affin Hwang also said the demand for gloves is expected to grow between six-eight per cent annually, premised on increasing glove consumption per capita and expanding use of gloves in non-medical industries. "Demand growth should be underpinned by healthcare reforms in emerging markets and increasing hygiene standards among the growing population," it added. It expects the sector to deliver nine per cent earnings growth for calendar year 2016/2017, largely on capacity expansion and market share gains. "All in, we maintain our 'neutral' rating on the sector, as a reflection of the lacklustre profitability growth profile vis-a-vis the sector valuation. "We still prefer players with a changing product mix and rising nitrile capacity like Top Glove (but with a lower target price), and neutral on nitrile-centric players like Hartalega and Kossan," Affin Hwang said. The research house maintained its "hold" rating for Hartalega and Kossan with a target price of US$0.97 (RM4) and US$1.56 (RM6.40). (US$1 = RM4.08) It set a "buy" call for Top Glove with a target price of RM5.40. At 3.20 pm, shares of Hartalega, Kossan and Top Glove rose six sen, 18 sen and 17 sen respectively to RM4.51, RM6.61 and RM4.55. --BERNAMA