MALAYSIA: Latex glove demand to stay resilient, bird flu in focus

"If the H7N9 bird flu virus cases deteriorate, there would be a high likelihood of a pent-up demand for rubber gloves," it said on Monday (6 May 2013).

The research house said new cases of the H7N9 bird flu virus traced in China could further underpin the importance of hygiene and thus potentially increase the demand for examination rubber gloves.

Kenanga Research upgraded the Malaysia's rubber glove sector to "Neutral" calls from "Overweight".

Its top pick in the sector was Kossan Rubber Industries Bhd because "its valuations are undemanding with the stocks trading at 9.2 times CY14 earnings per share (EPS) or at a 38% discount compared to Top Glove Corp Bhd at 14.5 times and Hartalega Holdings Bhd at 13.3 times."

"Kossan's rerating catalysts are gaining momentum via its maiden foray into Indonesia to expand its technical rubber products (TRP) division there and followed its new land acquisition," it added.

Kenanga Research maintained its preference for Hartalega due to its "highly automated production processes" model, solid improvement in its production capacity and reduction in costs.

All these factors, it said, enabled Hartalega to achieve better margins compared to its peers, its superior quality nitrile gloves through product innovation and its positioning in a booming nitrile segment with a dominant market position.

Source: Daily "The Star", Kuala Lumpur; 6 May 2013

(Syed Rashid Ali, Karachi, Pakistan)