RHB Research is giving Malaysia’s glove sector an optimistic review, citing that the marker conditions are favourable.
The research firm says it was Overweight on the sector, naming Hartalega, Top Glove , Kossan and Supermax as strong performers (in terms of Buy calls), amidst the strong US dollar and steady gloves demand, to name a few factors that favour its market.
Hartalega’s next generation integrated glove complex (NGC) will commence in August 2014; it is expected to increase its annual total capacity to 43 billion pieces by 2020.
New financial results for Top Glove is likely to post steady yet not drastic growth, the firm says, adding that it expects the increase of its nitrile production capacity will further boost sales.
Kossan’s financial results is commendable, says RHB Research, attributing it to the glove maker’s higher production efficiency due to the improved automation in its plants.
“Given recent market conditions, we have revisited and revised our assumptions. We maintain our BUY call on the stock, with our fair value now at RM7.53, pegged to an unchanged 14.0 times FY14F P/E,” says RHB Research.
Meanwhile, Supermax also posted a healthy second quarter financial results for this year. Its two new plants that will be fully commissioned by 2014 are also expected to further bolster its sales.