KUALA LUMPUR: CIMB Equities Research retains its Overweight stance on the glove manufacturing sector, with the potential re-rating catalysts being a continuing uptick in demand, capacity expansion and strong earnings growth.
“Adventa and Supermax remain our top picks,” it said on Wednesday, March 24.
CIMB Research said the rubber glove sector did well during the quarters ending Dec-Feb, with core net profit for the six companies in our coverage rising on average 23% quarter-on-quarter and more than doubling year-on-year.
“Half of the companies topped our expectations. The results trend was consistent with our expectations of strong results due to pricing power stemming from robust demand,” it said.
This enabled margins to improve despite rising latex costs and a depreciating US$. It does not see any change to this picture of strong demand, which the manufacturers will be able to tap into, thanks to their continuing capacity expansion.
“We also expect the impact on margins to be minimal given the strong demand which will allow the companies to pass through the cost increases,” it said.
About Me
- Nuang
- Ibrahim bin Ramli@Nuang started his career with CIMB Wealth Advisors Berhad as Agency Manager in April, 2008.Previously he was an Internal Auditors and Accounts Executive with Perodua Sales Sdn Bhd since 17 August, 1994. His background:- 1.Certified of Achievement for Master Sales Leadership from Dr Lawrence Walter Ng of President of The Art Of Learning and International Of Learning Without Learning 2.Certified for eXtra Ordinary Performance of Lawrence Walter Award Certificate for One Million Ringgit Club 2007 3. Certified Life & General insurances 4. Conferred with Diploma in Business Studiess & Bachelor of Business Admin(Hons)Finance from UiTM, Terengganu Branch & Shah Alam respectively;
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