MARGMA eyes 10pc export growth to RM18b in 2018
KUALA LUMPUR: Malaysian Rubber Glove Manufacturers Association (Margma) is hopeful of achieving more than 10 per cent export growth to RM18 billion this year, as global demand surpasses supply.
“This year, rubber glove exports should expand by more than 10 per cent to RM18 billion, from last year’s RM16.20 billion," said Margma president Denis Low Jau Foo.
“In the first two months of the year, we have shipped out RM2.86 billion worth of gloves. That is 12 per cent more than last year’s first two months of RM2.54 billion,” he told NST Business in an interview here.
Margma represents 90 per cent of local glove manufacturers. Malaysia is the world’s top supplier of rubber gloves. All over the world, rubber gloves are used in the healthcare, food-handling and other industries.
Glove-making giants listed on Bursa Malaysia include Top Glove Corp Bhd, Hartalega Holdings Bhd, Supermax Corp Bhd and Kossan Rubber Industries Bhd. They export medical gloves, a healthcare necessity, to over 190 countries.
BIMB Securities Research has a ‘buy’ call on Top Glove’s shares and thinks the glovemaker’s share price can rise as high as RM11.40 from the current RM9.85. The analyst is bullish on Top Glove’s earnings as it will book in higher profits, following the purchase of sizeable rival Aspion Sdn Bhd.
MIDF Research maintained its ‘buy’ call on Supermax as the glovemaker is receiving higher glove orders from China and eastern Europe. Supermax’s new glove production lines in Klang are expected to come onstream in the quarters ahead to meet these additional demand.
Hong Leong Investment Bank rated Kossan as ‘neutral’ and sees its share price inching up further to RM8.90 from the current RM8.70, citing the glovemaker’s subdivision of one share into two by the third quarter of this year will promote liquidity. Kossan’s additional lines of three billion pieces will boost this year’s revenue and earnings.
JP Morgan placed a ‘neutral’ outlook on Hartalega as it felt that upside volume and earnings is hampered by the glovemaker’s capacity constraint. Hartalega’s 1-for-1 bonus issue which has taken effect by the end of the first quarter has buoyed the share price at a high of RM6.20.
In giving a better insight into the business, Low cited Malaysian Rubber Export Promotion Council’s (MREPC) data highlighting global consumption rate of medical gloves is averaging at 25 pairs.
In China, however, the per capita usage is only four pairs while in India, it is three pairs.
“There’s room for growth in Malaysia’s rubber glove exports, especially from emerging markets. MREPC and MARGMA are working very hard to help raise hygiene awareness in the healthcare sector,” he said.
“Hospitals, dental clinics and nursing homes are placing more orders of medical gloves for the protection against cross contamination among healthcare workers and patients alike."
“The industry’s ability to consistently churn out high quality medical devices at affordable pricing through innovation ensures our global lead,” he added.
When asked on challenges the industry faces, Low noted as the ringgit strengthens against the US dollar, manufacturers have no choice but to raise glove prices accordingly to protect shareholders’ interests.
“It is normal for manufacturers to pass on costs to buyers as we work on a cost-plus basis. The production of medical gloves is capital intensive and the return on investments is the driver for the industry’s sustained growth," he said.
Original article featured in New Straits Times, article can be accessed here.