Malaysia’s Affin Hwang Capital Research (Affin Hwang) thinks the acknowledgement of high production costs and labour issues will boost performance in the rubber glove sector throughout 2020 – the group expects glove makers to benefit significantly from stronger US demand after its imposition of a 15% tariff on rubber gloves imported from China.
The high production costs were due to the natural gas price hike in July 2019 while the sector faced labour setbacks which limited the total allowable overtime in a month to some 104 hours only.
However, Affin Hwang said the “stronger earnings growth” in 2020 will likely re-rate the rubber glove sector from “Neutral to Outperform.”