MONEY MASTER

  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...

After months of deep corrections and industry pessimism, Malaysia’s glove sector is showing early signs of a turnaround—offering investors an opportunity to accumulate select counters at  multi-year low valuations . In the latest sector review, market analysts highlighted that glove manufacturers are currently trading at  -2 standard deviations below their 1-year forward P/B average , a level that typically signals deep-value territory. Valuations Reflect Fear, Not Fundamentals Despite the sector being in a down-cycle, companies like  Hartalega (HARTA)  and  Kossan Rubber (KOSSAN) continue to post profits and maintain operational stability. With HARTA trading at  1.3x P/B  and KOSSAN at  1.0x , their valuations appear overly depressed—especially in light of improving demand visibility. Unlike previous downturns where companies dipped into the red, most glove players today remain operationally resilient, supported by leaner inventories and more dis...

  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...

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...