We left the recent 5th International Rubber Glove Conference & Exhibition (IRCGE) feeling positive about the sector. Despite considerable headwinds encountered by the sector this year, demand for rubber gloves continues to grow at a healthy clip. With continued technological advancement of glove products and facilities, we believe Malaysian rubber glove manufacturers will maintain its leadership in the global market.
In light of the positive long term prospects of the industry, we maintain our OVERWEIGHT call. All the glove stocks under our coverage remain as Buys. Potential re-rating catalysts include the continuing uptick in demand from the healthcare industry, ongoing capacity expansion and strong earnings growth. The recent sharp pullback in share prices has made the sector even more attractive with undemanding average P/Es of 7-8x. Supermax and Latexx remain our top picks.
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