KUALA LUMPUR (July 21): CGS-CIMB Securities Sdn Bhd has maintained its 'Overweight' rating on the rubber gloves sector and said glove stocks remain attractive as key beneficiaries of the strong global glove demand due to Covid-19.

In a note July 20, the research house said its sector top picks are Top Glove Corp Bhd and Supermax Corp Bhd.

“We also have Add calls on Hartalega Holdings Bhd and Kossan Rubber Industries Bhd.

“Re-rating catalysts: higher-than-expected rise in average selling prices and/or stronger-than-expected glove demand. Downside risks: stiff pricing competition and/or faster-than-expected success in the development of a Covid-19 vaccine,” it said.

CGS-CIMB also highlighted that the Malaysian Rubber Glove Manufacturers Association (MARGMA) was not overly concerned about the impact from Chinese glove makers on Malaysian manufacturers despite their aggressive expansion plans.

“MARGMA said it believes the Malaysian glove sector as a whole will continue to have an edge over rivals from other countries given: i) their industry-leading technology that is ahead of competition (estimated 8-10 years) via R&D efforts, ii) supportive ecosystem to support glove production (suppliers, transportation, infrastructure, etc.), and iii) established trackrecord on the quality of its products built over the years,”it said.