KUALA LUMPUR – The average selling prices of nitrile gloves are expected at between US$65 and US$75 (RM270 and RM312) per 1,000 pieces in the second half of 2021, said Hong Leong Investment Bank (HLIB).
Despite the decline, it noted that a shortage in disposable gloves remains, with the crunch expected to last until 2023 before supply catches up with demand.
“With vaccines appearing less effective against certain new variants and the winter heading towards year-end, we do not rule out the possibility of Covid-19 cases rising again, despite vaccination efforts in key markets. This will inevitably increase the demand for disposable gloves,” said HLIB in a note today.
It lowered its financial years 2021 and 2022 net profit forecasts for Top Glove Corp Bhd by -3.3% and -2.6%, respectively, and Kossan Rubber Industries Bhd’s 2021 profit forecast by -7.9%, accounting for lower sales volumes due to a smaller workforce capacity during the virus lockdown.
Glove manufacturers could operate at only 60% workforce capacity for the whole of last month, and under the National Recovery Plan’s Phases 2 and 3 from July to October, at a maximum 80% capacity.
At the current price levels, however, healthy dividend yields for glove players to support share prices are still expected, at between 6.9% and 19.2%.
HLIB maintained its “overweight” call on the rubber gloves sector and adjusted downwards its target price for Top Glove (RM6.76 to RM6.72) and Kossan (RM5.60 to RM5.54). – Bernama, July 2, 2021
