Malaysia is the world’s leading glove producer as it supplies about 240 billion pieces of rubber gloves globally, meeting the world demand of almost 70% of 360 billion pieces in 2020. The number of new industry players in glove sector has increased, and is seen setting up glove manufacturing facilities around Malaysia due to the spike in demand amidst Covid-19 pandemic. Several companies kicked off glove production venture in 2020 with a targeted glove capacity per annum, as shown in the figure below.

According to Bloomberg data, the turnover of seven glove stocks from March to July 6, 2020 had reached RM 57.66 billion, about 19% of the RM 300.4 billion turnovers in Bursa. The seven glove stocks are Hartalega Holdings Bhd, Top Glove Corp Bhd, Kossan Rubber Industries Bhd, Supermax Corp Bhd, Careplus Group Bhd, Rubberex Corp (M) Bhd and Comfort Gloves Bhd.

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In addition, the combined market capitalisation of the seven companies mentioned above had reached RM 140.22 billion during that period, which was more than tripled from RM 44.43 billion on the 28th of February 2020. Top Glove’s market cap was at RM 53.77 billion during that period, making it the sixth after Petronas Chemicals Group Bhd. Besides, Top Glove recorded a 412% year-on-year jump in net earnings to RM 1.87 billion, with revenue grew 50.72% to RM 7.24 billion in its latest financial year statement.

The Big Four glove makers in Malaysia, namely Top Glove, Hartalega, Kossan Rubber and Supermax saw an increase of 13% of all transactions across the local stock markets, which is equivalent to a transaction value of about RM 40.8 billion in the period.

From the figure above, the seven key glove players in Malaysia had positive revenue growth from 2019 to 2020, even some companies like Kossan Rubber Industries Bhd, Careplus group Bhd and Rubberex Corp. (M) Bhd had only released their income statements up to the third quarter of 2020.

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By comparing sales growth from 2019 to 2020, Top Glove is the winning company with 50.74%, followed by Supermax Corp. Bhd with a sales growth of 38.59%, where Hartalega Holdings Bhd had only 3.34% of sales growth in 2020.

In terms of profit margin, Supermax Corp. Bhd had the highest gross profit margin in 2020 compared to the other glove players in Malaysia, reaching 49.16%, followed by Top Glove Corp. Bhd, with a gross profit margin at 39.38%. Careplus Group Bhd had the lowest gross profit margin of 2.17% from its first to third-quarter financial statement in 2020.

Glove manufacturing industry had been facing competitive business challenges such as making critical business decisions based on hard facts. Data is found to be more crucial for the management to make a better-informed business decision. For instance, Malaysian Rubber Glove Manufacturers Association (MARGMA) has collaborated with Fusionex and MDEC on a digital transformation journey for the glove manufacturers.

Digital transformation will benefit the glove sector, such as automation, robotics and artificial intelligence when product innovation and technology get competitive nowadays. Top Glove’s founder, Tan Sri Lim, claimed that Top Glove would fully embrace Industry 4.0 to produce high quality of gloves efficiently at a minimum cost. However, Lim mentioned that it is not possible for glove manufacturing to be fully automated currently as human resource are much needed as well. On the other hand, the company will continue to invest in automation and digitalisation to improve production yields, quality and efficiency towards the goal.

It seems that the glove sector has become a hot topic globally due to Covid-19. However, it might not need that much capacity, especially when the vaccines are out. Nonetheless, some investment analysts also feel that the glove sector will offer healthy margins in the future, even when the pandemic eases.

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Reference:[1] https://www.mykayaplus.com/malaysias-big-4-glove-companies-growth-story/

[2] https://www.google.com/search?q=Analysis+of+Glove+Companies+in+Malaysia+in+2020&rlz=1C1EJFC_enMY887MY887&oq=Analysis+of+Glove+Companies+in+Malaysia+in+2020&aqs=chrome..69i57.503j0j9&sourceid=chrome&ie=UTF-8

[3] https://www.theedgemarkets.com/article/four-more-companies-plan-join-rubber-glove-makers-club

[4] https://www.theedgemarkets.com/article/rm5766b-poured-these-seven-glove-stocks-march

[5] https://techwireasia.com/2018/11/2019-budget-is-malaysia-doing-enough-to-boost-its-digital-transformation/

[6] https://www.topglove.com/App_ClientFile/7ff8cb3f-fbf6-42e7-81da-6db6a0ab2ef4/WebEvent/UploadItem/EventDocument/1024f4bd-24a5-4550-aa84-6f030ad5a675_en.pdf

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