KUALA LUMPUR, July 31 (Bernama) -- Bursa Malaysia ended higher on Friday as investors continued to accumulate blue-chip stocks in line with stronger performances across most regional markets. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) rose 4.50 points to 1,724.90 from yesterday’s close of 1,720.40. The benchmark index opened 0.83 of a point higher at 1,721.23, and moved between 1,715.67 and 1,730.12 throughout the day. The broader market was positive with gainers outpacing losers 707 to 402, while 547 counters were unchanged, 1,085 untraded and 56 suspended. Turnover expanded to 3.03 billion units valued at RM3.56 billion from 2.49 billion units valued at RM2.25 billion on Thursday.
Sector Call: UNDERWEIGHT
RHB Research maintains a cautious UNDERWEIGHT stance on the rubber products sector, citing prolonged oversupply, rising cost pressures, and shrinking pricing power.
Stock Ratings and Target Prices
| Company | Rating | Target Price |
|---|---|---|
| HARTA (5168.MY) | SELL | RM1.33 |
| KOSSAN (7153.MY) | SELL | RM1.23 |
| SUPERMX (7106.MY) | SELL | RM0.54 |
| TOPGLOV (7113.MY) | SELL | RM0.65 |
| Riverstone (AP4.SG) | BUY | SGD0.95 |
Key Sector Challenges
1. Export Declines Reflect Weak Demand
April: -22% MoM glove export drop
May: -6% MoM
Driven by slow restocking, lingering inventories, and fading momentum from late 2024 front-loading.
2. Rising Regional Competition
New glove plants in Indonesia and Vietnam set to threaten Malaysian exports by November 2025.
Aggressive pricing by Chinese manufacturers further pressurises Malaysian players.
3. Margin Pressure from Cost Increases
Ringgit appreciation YTD erodes export profit margins.
Cost pass-through ability has fallen from 100% to ~50%, reflecting weak buyer sentiment.
New EPF rule for foreign workers (Oct 2025) adds US$0.15–0.20 per 1,000 gloves.
Expanded SST on imported latex adds US$0.25–0.30 per 1,000 gloves.
4. Rising Operating Costs
Energy cost pressures persist as natural gas tariffs surged 6% in June.
Selling prices stuck at US$19–22 per 1,000 gloves (flat vs late 2024).
Valuation vs. Fundamentals
Valuations at 0.9x P/B look cheap, 1.2 SD below 5-year average.
But RHB warns of earnings disappointments in the upcoming August reporting season, likening the current period to early 2023's trough.
Only Bright Spot: Riverstone
Riverstone is rated BUY for:
Focus on healthcare specialty gloves with higher margins.
Exposure to semiconductor recovery via cleanroom products.
Leaner cost structure and better demand visibility.
Investor Takeaway
Despite historically low valuations, the glove sector remains under earnings pressure from:
Global overcapacity
Stagnant ASPs
Rising production costs
Limited pricing power
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