- The Malaysian glove sector is officially out of the woods with anticipation of sequential earnings growth coming into fruition throughout 2024. We have also observed a feasible trend of improving operating statistics from the past few quarters.
- With this and the US’ precipitous tariff hike on China’s medical-grade gloves beginning 2026, we re-affirm our optimism that potential valuation re-rating may continue to catalyse the sector’s positive share price trajectories.
- - Read this at SGinvestors.io -
A glimpse of 1Q24 results.
- Malaysian glove stocks under our coverage delivered mixed set of results in 1Q24. Kossan's results were within expectations, while Hartalega and Top Glove (SGX:BVA)'s missed our expectations. This was mainly due to delayed cost past through and ASP-cost mismatch in the quarter, as higher input costs are not timely reflected in ASP revisions.
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Operating matrixes turning over a new leaf.
- We anticipate the domestic glove companies under our coverage to deliver sequentially better results in the upcoming quarters throughout 2024.
- Examining Top Glove, Hartalega and Kossan's recent operating statistics, we observed that earlier ASP declines have come to a halt and are gradually trending up, while volume sales have seen a steep q-o-q improvement.
- Moreover, input cost moderation should lift overall operating margin as COGS falls on lower natural gas tariff and raw material costs.
Tailwind from US-China escalating trade tension is catalysing sector's valuation re-rating.
- Read more at SGinvestors.io.
