KUCHING: The relatively low and stable prices of latex, coupled with robust demand, will boost the performance for rubber glove makers in Malaysia for the years to come.
Affin Investment Bank Bhd’s research side (Affin Research) said latex prices have continued to head south despite the wintering period currently which falls typically from February to April annually, as well as a surge in the production of automobiles in China
Latex prices have declined by 26 per cent year on year and 13 per cent year to date.
“We believe this is due to the ample supply of latex from countries such as Vietnam and Cambodia. Both countries had ventured into the rubber plantations industry back in 2006 to 2007, and their plantations are now in their prime age following the initial gestation period.
“Therefore, we believe latex output from these countries will continue to increase going forward.”
Deemed as a staple product within the healthcare industry, Affin Research believed that demand for rubber gloves will continue to remain resilient.
We gather from the Malaysia Rubber Glove Exports Council that global demand and consumption (barring any viral outbreak) will continue to grow by around eight per cent to 10 per cent annually at least over the near term.
Herein, we think that the assessment is realistic judging from the recent historical demand trend, spurred by rising healthcare reforms globally.
In addition, we gather that global population is increasingly becoming more hygiene conscious, and some have even set more stringent requirements on the quality of gloves used while others are encouraging more healthcare centres to use them.
All in, we think that the global demand will continue to grow, in tandem with world population growth, and spurred along by an increase in usage at healthcare centres globally. This was on the back of the recently-concluded earnings season for the final quarter of 2013 (4Q13), which Affin Research said was commendable for glovemakers.
“All the Big 4 glove manufacturers – Top Glove, Supermax, Kossan and Hartalega – under our coverage performed generally within our and consensus expectations.
Overall, we attribute the Big 4’s healthy results to robust sales-volume growth backed by healthy capacity expansion, favourable raw material costs and an overall enhancement in operating efficiencies brought by managements’ initiatives in improving the automation process in their respective production facilities.
Source: Borneo Post Online
Published: 10 Mar 2014