malaysiang
KUALA LUMPUR, Public Investment Bank Bhd (PIB) has upgraded its call on the Malaysian glove sector to ‘overweight’ from ‘neutral’, backed by the sector’s higher sales volume and improving average selling prices (ASPs) quarter-on-quarter (q-o-q).
In a research note today, the investment bank said the sector’s growth is further supported by the ramp-up of new production lines, which indicates an improvement in utilisation rates and a strengthening of operational efficiency.
‘Recent results from the glove manufacturers under our coverage indicate an uptick in sales volume, driving sequential q-o-q revenue growth.
‘Customers have shown increased acceptance of higher ASPs, on the back of re-stocking activities on depleting inventories. The industry’s blended ASPs currently stand at US$20-21 (US$1=RM4.32) per 1,000 pieces of gloves,’ it said.
The investment bank anticipates the overall raw material price to normalise in the second half of 2024, giving room to sustain operating margin, as natural gas prices are
expected to trend downward during the same period.
‘We observe that the raw material prices, namely nitrile butadiene have been rising albeit slightly, while latex price has dropped since April 2024,’ it noted.
PIB said the weakening of the United States (US) dollar is likely to have minimal impact on the bottom line, as the normalisation of US dollar-quoted raw material costs creates a natural hedge against fluctuations in glove pricing.
‘Consequently, we do not foresee any significant impact on operating costs or profitability due to currency movements,’ it added.
Source: BERNAMA News Agency
