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Malaysia side moving up RM1.10 now !!! WOW !!! Very Powerful !!! LOL
Francisgohyc ( Date: 10-Oct-2024 10:07) Posted:
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Now RM1.08, confirm small profit
Eagle88 ( Date: 09-Oct-2024 17:25) Posted:
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Recovery in sight for Top Glove despite challenges
PETALING JAYA: Top Glove Corp Bhd
&rsquo s operating metrics are seeing visible signs of recovery despite anticipating short-term headwinds due to an unprecedented weakening of the US dollar.
More importantly, the recently revised US tariff hike on medical gloves from China is poised to catalyse meaningful flowback of demand to Malaysian glove makers, said UOB Kay Hian (UOBKH) Research.
It remains optimistic on Top Glove&rsquo s prospects over a medium-term horizon.
The research house maintained its &ldquo buy&rdquo call on the stock with a target price of RM1.45 a share.
UOBKH Research added Top Glove&rsquo s sales are mainly denominated in US dollar and the recent strengthening of the ringgit against the US dollar is expected to weaken the group&rsquo s earnings in the next two quarters, namely the fourth quarter of financial year 2024 (4Q24) and 1Q25.
It noted the rubber glove maker has a natural hedge as 45% to 50% of its production costs comprising raw material and chemicals are also in US dollars. It expects Top Glove to pass through some costs to customers via higher average selling price (ASP).
Nevertheless, it is undeniable that such drastic foreign exchange movement will impact the group&rsquo s net profit, which is expected to be in the range of 8% to 10% in the next two quarters. Its 2025 to 2026 prospects remain bright.
Following the depletion of distributor&rsquo s excess inventory since the second half of 2023, the industry&rsquo s operating matrixes such as volume sales, utilisation rate, ASP and margins have all seen sequential quarters of improvement.
The higher revised US tariff on Chinese gloves will likely push US distributors to stop importing medical gloves from Chinese manufacturers from November this year onwards and Top Glove has been receiving queries and orders from large-scale US distributors.
Top Glove plans to raise the ASP for its US nitrile gloves export and the absence of Chinese competition will largely benefit countries like Malaysia and Thailand (mainly latex) who are major exporters of medical gloves.
UOBKH Research stated in order to raise production capacity to 75 billion pieces, Top Glove would need to hire around 1100 workers which will lift the total workforce to 12,000 from the current 11,000 levels. It is recruiting around 200 new workers per month in anticipation of strong demand recovery.Top Glove&rsquo s monthly sales volume improved to 2.4 billion to 2.8 billion pieces in June to August this year, pushing its utilisation rate to about 50% in 3Q24.
Sales volume in September to October this year will further improve to 3.5 billion pieces/month (utilisation rate: 66%-70%).
The previously elevating raw material prices caused by bad weather and supply constraints have softened from May onwards. https://www.thestar.com.my/business/business-news/2024/10/04/recovery-in-sight-for-top-glove-despite-challenges
https://www.thestar.com.my/business/business-news/2024/10/08/trade-diversion-to-lift-earnings-of-glove-makers
Eagle88 ( Date: 10-Oct-2024 09:46) Posted:
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Trade diversion to lift earnings of glove makers
PETALING JAYA: The operating dynamics of local glove manufacturers remain favourable due to higher demand, supply rationalisation and stabilising average selling prices (ASPs).
Being export-oriented, the sector faced a headwind from the recent weakening of the US dollar.
However, RHB Research expects the flow-through impact from trade diversion &ndash arising from the hike in US import tariff on China from 2025 &ndash to have a net positive effect on the earnings of rubber product companies under its coverage.
&ldquo We maintain our &lsquo overweight&rsquo call on the sector, premised on an improving cost-pass-through model and restocking activities materialising in the second half of 2024 as demand-supply dynamics are expected to achieve equilibrium.
&ldquo The hike in US import tariff on China-made products is the icing on the cake as we expect this could escalate trade diversion outside China, eventually benefiting Malaysia manufacturers,&rdquo it stated.
It noted that industry-blended ASPs are currently hovering around US$20 to US$21 per 1,000 pieces, improving slightly from US$20 per 1,000 pieces in the second quarter of 2024 (2Q24).
&ldquo According to our channel checks, Chinese glove makers&rsquo ASPs now range between US$18 and US$19 per 1,000 pieces, higher from US$17 to US$18 in the previous quarter.
&ldquo That said, we understand that local glove makers are in discussions to pass on the effects of a weakening US dollar to customers by at least US$1,&rdquo the research firm said, noting this would raise the ASP range to between US$21 and US$22 by 4Q24.
As for demand, RHB Research said Malaysia&rsquo s glove export volume surged 66% month-on-month (m-o-m) and 105% year-on-year (y-o-y) in August, outpacing July&rsquo s growth.
The export value also rose 15% m-o-m and 51% y-o-y to RM1.6bil.
On the supply side, the brokerage&rsquo s channel checks indicate that local manufacturers are running at 70% to 80% capacity.
The research house expects a marginal change in global industry supply of six billion gloves in 2024, on the back of planned capacity replenishment by manufacturers.
By the end of 2024, Hartalega Holdings Bhd
will be able to produce four billion pieces of gloves as a result of the relocation of production lines to its NGC1.5 manufacturing facility.
Top Glove Corp Bhd
&rsquo s production is projected to hit three billion as it resumes previous capacity that had been temporarily decommissioned.
In Thailand, Sri Trang Gloves Ltd is planning a capacity expansion of 0.3 billion gloves, while Singapore-listed Riverstone Holdings Bhd is undertaking a decommission exercise of 1.3 billion pieces.
In a separate report, RHB Research said Top Glove&rsquo s core losses in the fourth quarter ended Aug 31, 2024 (4Q24), will narrow to between RM2mil and RM5mil, versus a 3Q24 core loss of RM53.5mil.
This improvement is attributed to operating efficiency and projected 20% increase in sales volume, plus flattish ASPs offset by a weaker US dollar.
Meanwhile, the research house expects Hartalega and Supermax Corp Bhd
to benefit from the trade diversion.
RHB Research maintains its &ldquo buy&rdquo calls on all three stocks, but lowered its earnings estimate for the financial years 2025 to 2026 following the stronger ringgit.
&ldquo Our US dollar/ringgit assumptions for FY25 and FY26 were lowered to 4.01 and 4.00 from 4.65 and 4.60,&rdquo said the research house.
It said Top Glove&rsquo s valuation remained compelling, trading at minus 0.2 standard deviation (SD) from its two-year historical mean of 1.5 times.
Likewise for Supermax and Hartalega, which are trading at minus 0.4 SD and 0.9 SD, respectively, from their two-year historical means.
Francisgohyc ( Date: 09-Oct-2024 17:16) Posted:
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