Malaysia Gloves Sector - Maybank Research 2024-07-29: Intensifying Competition; Downgrade To Tactical Positive

• We are more cautious on the glove sector after our meetings and plant visits with major China glove makers last week, as we downgrade the sector to tactical POSITIVE (from POSITIVE).
• We downgrade Top Glove to HOLD while maintaining BUYs on Hartalega and Kossan.

China site visit note

• - Read this at SGinvestors.io -
• Cost efficiency and technology are keys for Malaysia glove producers. We maintain earnings forecasts but lower our target prices by 4% to 23%.

Impressed by Chinese glove plants

• We visited Intco Medical Technology [300677 CH] and Bluesail Group [002382 CH] glove factories in Shandong, China, last week.
• - Read this at SGinvestors.io -

Capacity expansion to continue

• Both Intco and Bluesail are looking to expand their capacity progressively, locally and in Southeast Asia (SEA). While Intco and Bluesail will raise their capacity gradually, depending on market demand, uncertainties remain regarding their pricing/market strategy, especially when they have relatively lower production costs due to newer production lines and technology as well as having a vertically integrated supply chain.
• Elsewhere, Intco and Bluesail are also looking to expand their non-glove businesses such as wheel chairs (Intco) and medical devices (Bluesail).

A persistent challenge to Malaysia glove makers

• Read more at SGinvestors.io.

Wong Wei Sum CFA Maybank Research | https://www.maybank.com/ 2024-07-29 SGinvestors.io

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