KUALA LUMPUR (July 15): CGSCIMB Research has maintained its “Overweight” rating on the Malaysian rubber gloves sector and said believe the glove operating environment will turn favourable in 2H19F,with easing pricing competition and improved supply-demand dynamics.

In a note July 12, the research house said robust long-term prospects and inelastic demand for rubber gloves continue to support the sector’s appeal, justifying its premium valuations versus KLCI.

CGSCIMB said long-term prospects for Malaysia’s glove sector remain upbeat, driven by inelastic glove demand (we project global demand growth of 8-10% p.a.).

It said this is in tandem with rising global healthcare outlay and higher health awareness, mainly in emerging countries, where glove usage per capita is low.

:We expect Malaysia to remain a dominant force in the glove sector (64% of 2018 global glove exports) due to higher operating efficiencies, wider product offerings from better R&D efforts and aggressive capacity expansion plans.

“Maintain sector Overweight, with Kossan Rubber Industries Bhd and Supermax Corp Bhd as our top picks. We have an Add call for Top Glove Corp Bhd, while Hartalega Holdings Bhd is a Hold,” it said.