Commentary on Glove Sector;
Still on mend as average selling prices are still declining, albeit not as aggressive as past months and looks to normalise in subsequent months. Most players are already discussing with customers to revert back to the cost-pass-through business model (same as pre-Covid19).
They are still facing stiff competition from other parts of the world, particularly from China. Recently, Top Glove has postponed their secondary listing on the Hong Kong stock exchange as earnings expectations are not met internally to garner better valuations.
Implementation of Cukai Makmur may also hurt bottomline margins for 2022 as most glove players (particularly those big ones) would be still reporting profits above RM100.0m mark.
Hence, it's still not the time to relook into the gloves sector yet. Perhaps towards year end when market players anticipate earnings to normalize and potentially see some improvement for 2023, then interests in the gloves sector may pick up.
You could trade into gloves companies for short-term technical rebound, but best to lock in profits or cut loss as soon as possible, not advisable to hold for long term for the time being.
