PETALING JAYA: Maybank Investment Bank (Maybank IB) Research has tactically upgraded the much-maligned glove sector to a “positive” call, citing improving sales volume of the industry and stabilising prices of raw materials as primary factors.
On the other hand, it maintains the cautious acknowledgement that medium-term movement of average selling prices will continue to be determined by the movement of raw material prices and pricing strategies of Chinese glove makers.
You are viewing: How Many Magical Silicone Gloves Sold Per Year Revenue
In a report published yesterday, the research outfit said: “Glove makers are turning more positive on their 2024 outlook. While sales volume remains volatile with a shorter order lead time as buyers are in no rush to lock in a contract due to excess supply in the glove market, sales volume has improved significantly quarter-on-quarter among the Malaysian glove makers.”
It pointed to rising restocking activities and lower price gaps compared to their China counterparts, which is at present approximately US$2 to US$3 per thousand pieces for the sales improvement.
Read more : How To Choose Winter Gloves
Consequently, Maybank IB Research is expecting plant utilisation rates to increase in the upcoming quarters, ranging over 35% to 50%, from the current range of 35% to 45%, leading to lower production costs ahead.
“Raw material prices have also started to stabilise after a surge last month. Both natural latex and nitrile latex prices are now at US$1.16 per kg and US$0.77 per kg, down 3% and 1% respectively, since Nov 2023,” it reported.
In addition, the research revealed that natural gas prices – the key energy source for Malaysian glove makers, which constitutes 16% to 20% of total cost – have been trending down since early November 2023 too.
Maybank IB Research believes the extent of competition in the sector lies in the hands of China’s glove makers, who exert significant influence due to their more competitive costing and pricing strategies.
Read more : How Did Donald Glover Film In Cuba
“Having said that, not all purchase orders will necessarily go to China as buyers also implement risk management strategy; some purchase orders should be directed to the other markets, including Malaysia.
“Hence, cost and production efficiencies are key to seizing these opportunities. Additionally, given the continuous price war, a robust strong balance sheet is important to help glove makers weather the downturn,” it said.
Among companies in the sector under its coverage, the research house has notably placed “buy” calls on Hartalega Holdings Bhd and Kossan Rubber Industries Bhd, predicting better cost efficiency and higher utilisation for the former.
Meanwhile, it added that Kossan Rubber, unlike other pure glove makers, has diversified income from glove and technical rubber products and a strong balance sheet, which would buffer impact from potential downturns in the glove sector.
Of interest, Maybank IB Research has also projected glove giant Top Glove Corp Bhd to turn back into the black by the financial year ending Aug 2025 instead of the next fiscal year, driven by improved sales volume and stabilising raw material prices.
Source: https://t-tees.com
Category: HOW
