Will Chinese gloves enter Southeast Asia? Malaysian businesses plummeted 📉
Due to the expansion of production capacity in China, competition in the industry has intensified. Bank of Malaysia's investment bank research downgraded the rating of local glove stocks from “positive” to “tactically positive”, and local glove stocks are falling one after another!
Following the closing of the overall decline on Monday (29th), the three major local manufacturers closed at noon on Tuesday (30th) and were still bleeding, and the decline widened further. Among the four Heavenly Kings, $KOSSAN.MY$ 、 $HARTA.MY$ with $TOPGLOV.MY$ Both fell by more than 4%.
Following the closing of the overall decline on Monday (29th), the three major local manufacturers closed at noon on Tuesday (30th) and were still bleeding, and the decline widened further. Among the four Heavenly Kings, $KOSSAN.MY$ 、 $HARTA.MY$ with $TOPGLOV.MY$ Both fell by more than 4%.
Technological modernization of Chinese enterprises
Bank of Malaysia Investment Bank Research and released an analysis report, saying that they visited British Healthcare and Blue Sail Healthcare in Shandong Province last week, and this trip made analysts deeply impressed by the advanced technology of Chinese enterprises!
Analysts observed that Inco's factory has modern facilities for production lines, packaging, and storage; Blue Sail's factory and workshop are similar to local glove operators, except for differences in packaging and storage models.
The two glove companies in China have almost 100% utilization of factory facilities, and both are looking to expand production capacity and set their sights on the Southeast Asian regional market, including China.
In addition to going overseas, expanding production capacity to overseas markets, and developing non-glove products, Inco is also interested in developing wheelchair products; Blue Sails plans to develop medical equipment products.
Analysts pointed out that although Inco and Blue Sail will gradually increase production capacity according to market demand, there is still uncertainty about their pricing/marketing strategies, especially when they have relatively low production costs due to newer production lines and technology and vertically integrated supply chains.
Analysts observed that Inco's factory has modern facilities for production lines, packaging, and storage; Blue Sail's factory and workshop are similar to local glove operators, except for differences in packaging and storage models.
The two glove companies in China have almost 100% utilization of factory facilities, and both are looking to expand production capacity and set their sights on the Southeast Asian regional market, including China.
In addition to going overseas, expanding production capacity to overseas markets, and developing non-glove products, Inco is also interested in developing wheelchair products; Blue Sails plans to develop medical equipment products.
Analysts pointed out that although Inco and Blue Sail will gradually increase production capacity according to market demand, there is still uncertainty about their pricing/marketing strategies, especially when they have relatively low production costs due to newer production lines and technology and vertically integrated supply chains.
Price wars test cash flow
Despite rising demand and stable average prices, the local glove industry is expected to achieve strong profits within 12 months; however, competition from China is intense, and Bank of Malaysia Investment Bank remains cautious about the prospects for the source of gloves.
Analysts originally believed that before the dust settles in the US presidential election, all Chinese businesses will expand cautiously. However, the analysts were quite surprised that Shenzhou glove companies actually wanted to expand the Southeast Asian market.
However, based on risk management strategies, buyers will also not blindly help Chinese businesses; analysts say that if China's gloves are to stand out, they must achieve cost efficiency.
Analysts also warned that in order to fight a possible price war, companies also need strong cash flow.
In summary, Bank of Malaysia Investment Bank downgraded the rating of local glove stocks from “positive” to “tactical positive” and narrowed the stock price balance (PBV) value to 1.65 to 3.0 times.
On the stock side, the bank maintained a “buy” rating for Hetejia and the high-yield cosmetics industry, but downgraded the rating of top gloves to “hold”.
Despite rising demand and stable average prices, the local glove industry is expected to achieve strong profits within 12 months; however, competition from China is intense, and Bank of Malaysia Investment Bank remains cautious about the prospects for the source of gloves.
Analysts originally believed that before the dust settles in the US presidential election, all Chinese businesses will expand cautiously. However, the analysts were quite surprised that Shenzhou glove companies actually wanted to expand the Southeast Asian market.
However, based on risk management strategies, buyers will also not blindly help Chinese businesses; analysts say that if China's gloves are to stand out, they must achieve cost efficiency.
Analysts also warned that in order to fight a possible price war, companies also need strong cash flow.
In summary, Bank of Malaysia Investment Bank downgraded the rating of local glove stocks from “positive” to “tactical positive” and narrowed the stock price balance (PBV) value to 1.65 to 3.0 times.
On the stock side, the bank maintained a “buy” rating for Hetejia and the high-yield cosmetics industry, but downgraded the rating of top gloves to “hold”.
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