SGX Market Updates

SGX’s Trio of Rubber Glove Makers Average 32% Total Return in YTD


PUBLISHED ON |

03 March 2020

  • SGX lists 3 rubber glove plays – Top Glove Corp, Riverstone Holdings and UG Healthcare Corp – which have a combined market cap of more than S$5 billion.

  • In the 2020 YTD, the trio of rubber glove plays have averaged a total return of 28.7%, bringing their 1Y and 3Y total returns to 10.1 %and 48.8% respectively.

  •  Global demand for rubber gloves is expected to increase as countries step up efforts to contain the spread of the COVID-19 coronavirus, which has spread to at least 65 countries and territories. So far, more than 3,000 patients worldwide have died from the virus and nearly 90,000 have been infected.




SGX lists 3 rubber glove plays – Top Glove Corp, Riverstone Holdings and UG Healthcare Corp – which have a combined market capitalisation of more than S$5 billion.

  • Top Glove: The world’s largest manufacturer of gloves is primary-listed on the Bursa Malaysia, with a secondary listing on SGX. It produces 70.1 billion gloves annually for more than 2,000 customers worldwide and exports to more than 195 countries.

  • Riverstone: With an annual production capacity of about 9.0 billion gloves, it makes premium nitrile gloves used in the healthcare industry, as well as nitrile and natural rubber clean room gloves.

  • UG Healthcare: Manufactures and sells disposable gloves under its proprietary “Unigloves” brand through an established global downstream distribution network.


In the 2020 year-to-date, the trio of rubber glove plays have averaged a total return of 28.7%, bringing their one-year and three-year total returns to 10.1% and 48.8% respectively.


The table below details the three rubber glove makers listed on SGX, sorted by market cap.

Name SGX
Code
Market
Cap
S$m
Total
Return
YTD
%
Total
Return
2019
%
Total
Return
1 Yr
%
Total
Return
3 Yr
%
2020 YTD
Average Daily
Turnover
(S$)
TOP GLOVE CORP BVA 48,671 18.6 -14.3 24.5 137.1 416,707
RIVERSTONE HLDGS AP4 763 10.3 -17.0 -6.1 24.0 1,232,760
UG HEALTHCARE 41A 42 57.1 -28.9 11.8 -14.7 1,877,206
Average 28.7 -20.1 10.1 48.8  

Source: Bloomberg & StockFacts (data as of 2 Mar 2020)



Robust Industry Prospects

Global demand for gloves is expected to increase as countries step up efforts to contain the spread of the COVID-19 coronavirus. The virus, which originated in China, has now spread to at least 65 countries and territories. So far, more than 3,000 patients worldwide have died and nearly 90,000 have been infected.

The Malaysian Rubber Glove Manufacturers Association (MARGMA) has said that its members are prepared to gear up glove production to meet requirements if the coronavirus outbreak becomes a pandemic. Malaysia currently accounts for about 63% of global medical glove output, or about 220 billion pieces in 2020, MARGMA noted in a media statement last month.



Earnings Highlights


Top Glove (1QFY20 ended 30 Nov 2019)
  • Sales revenue of RM1.21 billion, down 4.2% YoY.
  • Net attributable profit of RM111.8 million, up 0.1% YoY.
  • In tandem with strong glove demand, which is estimated to grow at 10%-12% yearly, the Group will continue organic expansion plans such as:
    • investing in existing line refurbishment and building new technologically advanced glove factories
    • adding more automation and digitalisation initiatives including:
    • Automated Guided Vehicle (AGV) transport and warehouse management system
    • glove auto packing system
    • artificial intelligence vision camera system for online detection and removal of defective gloves
    • auto compounding and chemical preparation
  • It will also explore M&As and JVs, while diversifying into rubber or healthcare-related businesses.

Click here for the full results statement.


Riverstone Holdings (FY19 ended 31 Dec 2019)
  • Revenue rose 7.4% YoY to RM989.0 million.
  • Attributable net profit rose 0.6% YoY to RM130.4 million.
  • We remain cognisant of industry-wide challenges that include intensifying competition, higher labour costs, foreign exchange and raw material price fluctuations.
  • We are focused on adopting automation to improve our production efficiency, as well as delivering high-tech and customised solutions to maintain our longstanding customer relationships.
  • Global sales volume for gloves is expected to grow at about 8%-10% in 2020, underpinned by an expanding global healthcare sector and increased awareness of hygiene practices.
  • Phase 6 of our expansion plans to lift capacity by up to 1.4 billion gloves to a total of 10.4 billion gloves per annum is on track, and will allow us to capitalise on burgeoning global demand in the coming year.
  • Plans to construct our new facility and expand capacity further are underway following our acquisition of a 3.8-acre landbank in Taiping.

Click here for the full results statement.


UG Healthcare (HY20 ended 31 Dec 2019)
  • Revenue rose 28.5% YoY to S$53.2 million.
  • Net profit fell 36.8% YoY to S$0.8 million.
  • Lower earnings due to increased marketing campaigns and higher recruitment efforts across all departments and distribution networks in Brazil, UK, China and Nigeria.
  • The Group has started major modification and upgrading of some of its existing production lines in progressive stages since June 2019.
  • Due to the coronavirus outbreak, we have been receiving a surge in orders for latex and nitrile gloves, which delayed our plan to modify certain production lines.
  • We are on track to achieve optimal utilisation with the existing production capacity of 2.9 billion gloves per annum in the current financial year, before embarking on construction of new production lines.
  • The additional annual capacity of 300 million gloves is scheduled to come on stream in the financial year ending 30 June 2021.

Click here for the full results statement.







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