- While the Malaysian gloves sector charted an impressive turnaround in 2024 after the COVID-19 lows as expected, risk-reward appears less appealing currently as valuations are trading close to the historical mean based on 2025’s full earnings recovery.
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2025 will be a year of delivery.
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- depletion of excess inventory,
- margin expansion on better efficiency and ramped-up capacity,
- moderating input costs, and
- the US’ revised tariffs on China gloves.
- Against the backdrop of these positives, we reiterate our view that the sector’s earnings are on the cusp of a progressive earnings recovery throughout 2025.
Nevertheless, rationalisation of overhyped market expectations anticipated.
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- We opine that the market may have built up expectations of operating matrixes such as utilisation rate and profitability margin returning to 2019’s level within the upcoming 1-2 quarters, with such optimism fairly reflected in the aggressive share price uptick seen throughout 2024.
US’ higher tariffs on China medical-grade gloves officially began in January.
- Read more at SGinvestors.io.
