MONEY MASTER

Karex (5247.MY)  jumped  12.4% to 95.5 sen at midday Thursday , valuing the world’s largest condom maker at just over  RM1 billion , after  CIMB Securities  and  AmBank Research  both initiated coverage with  “Buy”  recommendations. CIMB: RM1.60 Target, Structural Earnings Upcycle Ahead CIMB assigned the most bullish  target price of RM1.60 , highlighting a  multi-year structural earnings recovery  driven by the  mass-market rollout of Karex’s patented nitrile synthetic condom . Global expansion:  Karex’s exclusive partner (“Customer D”) has extended distribution to  18 countries , with a  full global rollout  in progress. Capacity growth:  Production capacity for nitrile condoms is expected to  increase fivefold to 900 million pieces annually by FY2028 . High margins:  The nitrile product commands  premium pricing  and  gross margins above 50% , supporting profitability. C...

Modest Earnings Uptick Expected Top Glove Corp Bhd (KL:TOPGLOV), the world’s largest rubber glove maker, is likely to post  only slight quarter-on-quarter earnings improvement  in its fiscal 4QFY2025, according to Phillip Capital. Projected net profit:  RM22–23 million, versus RM21.5 million in 3QFY2025. This would mark a turnaround from the  net loss of RM50.5 million  in 4QFY2024. The improvement is underpinned by higher utilisation rates, with the company running at  74% capacity  on stronger US orders. Headwinds: Prices and Currency Pressure Despite better volume, Phillip Capital warned that: Softer average selling prices (ASPs)  and A  stronger ringgit against the US dollar will weigh on margins. The research house has  cut its target price by 12 sen to 59 sen , citing persistent structural challenges that cap earnings recovery. Competitive Pressures Intensify Global oversupply continues to plague the glove sector, with: Chinese riv...

  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...

After a grueling downcycle,  Hartalega Holdings Bhd  (KL:HARTA) is showing signs of a potential turnaround. The glove maker, once battered by post-pandemic oversupply and predatory pricing, is now regaining its footing — thanks to a confluence of trade tariffs, automation efforts, and the slow but steady return of US-based demand. US Tariffs May Spark Sudden Reorder Wave The United States has imposed hefty 80–130% tariffs on Chinese medical gloves, a move that effectively narrows the pricing gap between Malaysian and Chinese producers. As US glove inventories dwindle and buyers brace for price normalization, analysts believe replenishment could accelerate. “Despite some buyers still adopting a wait-and-see approach, order visibility is improving, and a sudden uptick in orders isn’t off the table,” Kenanga Research noted in its company update. Hartalega, which now derives 70% of its glove sales from the US (vs. its historical average of 50%), stands to benefit the most. Efficie...

Top Glove Corporation Bhd (Top Glove) is making a strong comeback in the U.S. market, regaining momentum that could help reverse the sluggish glove sector sentiment. According to Kenanga Research’s latest update, the glove maker is seeing  a surge in U.S. orders , now accounting for  30% of total volume  — and it's aiming for 40% within two years. Despite global trade headwinds and tariff-related uncertainties, Top Glove is expected to post  double-digit sales growth in 4QFY25 , thanks to recovering U.S. demand. This comes as its  plant utilization rate climbs to 65% , up from 61% last quarter. Outlook: Positive Momentum Building Sales Volume Growth : Targeting a  15% quarter-on-quarter growth  in 4QFY25. U.S. Pricing Edge : Despite recent reciprocal tariffs,  Malaysian gloves remain 10–30% cheaper  than Chinese counterparts in the U.S. market. Production Ramp-Up : The extra 300 million pieces per month could boost quarterly revenue by  ...

What Happened: Top Glove’s stock hovers near its 2023 lows after  3Q earnings fell short , triggering analyst downgrades and worries about tougher days ahead amid rising costs and intensifying competition, especially from Chinese rivals. Market Context: Shares have  lost nearly half their value year-to-date . Competition from Chinese players shifting production overseas to bypass tariffs adds pressure. Analyst sentiment remains cautious: only  4 buys out of 21 ; average target price at  83 sen . Where Smart Money Is Watching: 1️⃣  Glove Sector Consolidation:  Watch for potential mergers, closures, or capacity cuts. 2️⃣  Export Markets:  Especially non-US markets where Chinese players are dumping supply. 3️⃣  Raw Material Trends:  Soft raw material prices could cap any price hikes. Money Master Take — Key Insights: Earnings visibility remains weak for Top Glove amid industry headwinds. Consider sector-wide exposure carefully, focusing on ...

  Neutral Outlook : Research houses, including MIDF Amanah Investment Bank Bhd (MIDF), CIMB Investment Bank Bhd (CIMB), and Hong Leong Investment Bank Bhd (HLIB), have maintained a neutral stance on  Top Glove  due to ongoing challenges in the market. Their target prices have been revised downwards: MIDF Research:  Target price of 83 sen  (from RM1.24) CIMB Securities:  Target price of 95 sen  (from RM1.40) HLIB:  Target price of 91 sen  (from RM1.01) Earnings Volatility : Despite efforts to diversify revenue and manage costs,  Top Glove  continues to face earnings volatility. Key challenges include: Margin compression : Continuing as a major concern. Supply chain disruptions : Especially from China, adding to competitive pressures. Q2 FY25 Performance : Surprise Turnaround : A core profit of  RM58.1 million  in  2QFY25 , driven by: Improved  average selling prices (ASPs) Higher sales order volumes Better utilisa...

Top Glove Corp Bhd  reported a  net profit of RM5.47 million  for its first quarter ended Nov 30, 2024 (1QFY2025), marking a turnaround from a  net loss of RM57.71 million  in the same quarter a year ago. The improved performance was attributed to  higher sales volumes ,  foreign exchange gains , and  increased US orders  ahead of tariffs on Chinese glove imports. Key Highlights Financial Performance Net Profit : RM5.47 million in 1QFY2025 vs. a net loss of RM57.71 million in 1QFY2024. Revenue : RM885.89 million, up  79.5%  from RM493.46 million in 1QFY2024. Quarter-on-Quarter (QoQ) : Improved from a net loss of RM3.57 million in 4QFY2024, with revenue growing  6.1%  from RM835.31 million. Earnings Per Share (EPS) : 0.07 sen in 1QFY2025, compared to a loss per share of 0.04 sen in 4QFY2024. Operational Highlights Plant Utilisation Rate : 66% in 1QFY2025. Selling Price Increases : Average selling price (ASP) hikes in August...

Glove stocks are back on the rise, following a brief pullback, with industry leaders like  Top Glove  and  Supermax  showing impressive daily gains of 6.8% and 6.5% respectively. This rally has fueled investor optimism, with glove manufacturers posting exceptional Q4 performances and cumulative gains exceeding 39% since October. Why the Glove Sector is Booming 1. Robust Industry Growth Malaysia, the world’s largest rubber glove producer, has demonstrated significant growth in 2024. Rubber glove sales surged by  17.2% year-over-year , reaching RM6.8 billion in the first half. Even amidst challenges like declining average selling prices and geopolitical risks, Malaysian exports of rubber gloves made up over  60% of total rubber product exports , cementing the country’s global market dominance. Key financial highlights from glove companies include: Top Glove : RM835 million revenue (+75.5% YoY) Kossan : RM507 million revenue (+25.8% YoY) Hartalega : RM652 mill...

Hartalega Holdings Bhd reported a 69% drop in net profit for its second quarter ended Sept 30, 2024, as rising raw material costs and a stronger ringgit affected export revenues. The net profit for this period was RM8.63 million , while without deferred tax income from capital investment incentives, the company would have recorded a pre-tax loss of RM47.45 million . Despite these challenges, revenue increased 44% year-on-year to RM652.07 million , driven by higher sales volume. A first interim dividend of 0.56 sen per share was declared, payable on Dec 11. Industry Challenges and Outlook: The glove manufacturing sector remains pressured by global oversupply and competitive pricing, which has impacted average selling prices . Furthermore, global shipping disruptions and volatile forex markets have contributed to these difficulties, with Hartalega deriving most of its income from exports. However, the company sees potential benefits from upcoming US tariffs on Chinese gloves , eff...

CIMB Securities has expressed a positive outlook for the glove industry , despite cost pressures from Budget 2025 measures. These cost pressures arise from higher labour costs , including increased foreign worker levies and a minimum wage hike . However, analysts remain confident that glove manufacturers will pass these increased costs to consumers by raising average selling prices (ASPs) . With labour costs making up around 9% to 11% of total production costs, production costs are estimated to rise by 1.7% to 2.4%. Glove makers are responding by raising ASPs between 5% and 10%, and prices are now between US$21 to US$23 per 1,000 pieces for orders slated for December and January delivery . A significant tailwind for Malaysian glove manufacturers comes from the upcoming hike in US tariffs on gloves from China . Starting in January 2025, US tariffs on medical and surgical gloves from China will rise from 7.5% to 50%, with further increases to 100% by 2026. This development is expec...

  The impending US tariff hike on Chinese-made gloves presents an opportunity for Malaysian glove makers to increase production, according to Top Glove Corp Bhd managing director Lim Cheong Guan . With US tariffs on China-made gloves set to rise from 7.5% to 50% in 2025 and 100% by 2026, Malaysian glove manufacturers could step in to meet the supply gap left by Chinese competitors. Top Glove, which derives 20% of its sales from the US, sees this as a chance to boost production . However, Lim emphasized that Top Glove has no plans to build new manufacturing facilities in the US due to the high costs of production , which are three to four times higher than in Malaysia. He noted that any US expansion would only be feasible if subsidized by the government. Although Malaysian gloves are not affected by the tariffs, the industry has faced challenges in the past, including forced labor allegations . Competitors like Supermax Corp Bhd have opted to manufacture within the US , wh...

Supermax Corp Bhd (KL) announced on Tuesday that it will begin commercial glove production at its first US manufacturing facility in Texas by January 2025. This marks a significant expansion for the Malaysian glovemaker into the US market. In its bourse filing, Supermax disclosed that its wholly-owned subsidiary, Maxter Healthcare Inc , based in the US, will commence testing and commissioning of its first batch of production lines in December 2024. The commercialization of glove production is expected to follow in January 2025. The phase one operation has a total production capacity of 4.8 billion pieces of gloves per annum , with plans to achieve half capacity next year. The remaining production capacity is anticipated to be completed by the fourth quarter of 2025, complementing Supermax’s current production capability of 21 billion pieces of gloves per annum . Notably, 29% of Supermax’s total sales are directed to the US market, according to analysts' data. "Our US plant ...