The glove manufacturing sector faces a challenging future with persistent overcapacity, weak demand, and high input costs, according to reports by Kenanga Investment Bank (Kenanga). The sector's operating environment in the first quarter of 2024 remained tough, with profitability under pressure from overcapacity, predatory pricing by overseas competitors, and high operational costs despite some recovery in orders.
Kenanga reiterated an UNDERWEIGHT rating on the sector, advising against investment in glove manufacturers due to the tepid profitability and high valuations. The bank highlighted the continued pressure from overcapacity and weak demand, predicting that the challenging conditions will persist through the second half of 2024.
Kenanga reported that overcapacity and predatory pricing have led to a buyers' market, with distributors and buyers seeing no urgency to place sizeable orders or hold substantial stocks. The industry's low utilisation rate of about 45% further exacerbates the situation, making it difficult for manufacturers to raise prices significantly. Additionally, input costs for materials such as nitrile butadiene rubber remain high, and natural gas costs are expected to increase, adding further strain on profitability.
The report also noted some positive developments, such as the decommissioning of older production facilities, which could help ease supply pressure and bring about more rational competition among local players. However, these measures are not expected to significantly improve the overall outlook for the sector in the near term.
Kenanga projected that the glove manufacturing industry will continue to face an oversupply issue throughout 2024, with demand expected to rise by 30% to 390 billion pieces due to restocking, before moderating to an organic growth rate of 15% annually. Despite this, the excess capacity of 212 billion pieces in 2024 indicates that low prices and depressed plant utilisation will continue to be a challenge.
Given the current market conditions, Kenanga has advised investors to avoid all names under their coverage, including Hartalega (HARTA), Kossan (KOSSAN), Top Glove (TOPGLOV), and Supermax (SUPERMX), due to their unsustainable profitability and lofty valuations. The bank has maintained a target price of RM2.33 for HARTA, RM1.48 for KOSSAN, RM0.75 for TOPGLOV, and RM0.83 for SUPERMX, all with an UNDERPERFORM rating.
根據Kenanga Investment Bank (Kenanga)的報告，手套製造業面臨着持續產能過剩、需求疲軟和投入成本高企的挑戰。該行業在2024年第一季度的運營環境仍然艱難，儘管訂單有所回升，但盈利能力仍受到產能過剩、海外競爭對手的掠奪性定價以及高昂的運營成本的壓力。
Kenanga重申了對該行業的減持評級，建議不要投資手套製造商，因爲該行業的盈利能力不高，估值很高。該銀行強調了產能過剩和需求疲軟帶來的持續壓力，並預測充滿挑戰的條件將持續到2024年下半年。
Kenanga報告說，產能過剩和掠奪性定價導致了買方市場，分銷商和買家認爲下大筆訂單或持有大量庫存並不緊迫。該行業約45％的低利用率進一步加劇了這種情況，使製造商難以大幅提高價格。此外，丁腈橡膠等材料的投入成本仍然很高，預計天然氣成本將增加，這將進一步增加盈利能力。
報告還指出了一些積極的進展，例如舊生產設施的退役，這可能有助於緩解供應壓力，並在當地參與者之間帶來更合理的競爭。但是，預計這些措施不會在短期內顯著改善該行業的整體前景。
Kenanga預計，在整個2024年，手套製造業將繼續面臨供過於求的問題，由於補貨，需求預計將增長30％至3900件，然後放緩至每年15％的有機增長率。儘管如此，2024年2120噸的產能過剩表明，低廉的價格和低迷的工廠利用率將繼續是一個挑戰。
鑑於當前的市場狀況，Kenanga建議投資者避開其所涵蓋的所有名字，包括Hartalega（HARTA）、Kossan（KOSSAN）、Top Glove（TOPGLOV）和Supermax（SUPERMX），因爲它們的盈利能力不可持續且估值過高。該銀行將HARTA的目標價格維持在2.33令吉，KOSSAN的目標價格爲1.48令吉，TOPGLOV的目標價爲0.75令吉，SUPERMX的目標價格爲0.83令吉，均爲表現不佳。
