Sector Update - Gloves
(OVERWEIGHT, maintain)
- A proxy to rising global healthcare spending
Our positive stance on the sector is premised on:
i) robust growth for overall glove demand, ii) improved health and hygiene
standards in emerging markets, especially China and India, which could
potentially lead to a rise in the usage of gloves, iii) increased capacity
expansion by glove makers to improve product mix which would in turn, boost
sales and earnings, and iv) favourable operating environment given softening
latex prices and steady US$ vs. RM. Other than that, a pandemic could be a
strong catalyst for an increase in demand for gloves, as seen previously
during the avian flu (H5N1) and swine flu (H1N1) outbreak. We maintain our
OVERWEIGHT call on the sector.
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