Sector Update � Rubber Products (NEUTRAL,
maintain)
- Stretched year ahead
Over the past month, the rubber products sector
(ex-Karex) has underperformed the KLCI amid concerns of margin compression
due to Ringgit strength and the rally in commodity-input costs. Global glove
demand should underpin volume growth supported by capacity expansion plans,
but declining ASPs and forex trend reversals are risks to our earnings. For
sector exposure, we recommend investors tread selectively and reaffirm our
BUY on Top Glove for its attractive valuation and improving efficiencies.
Maintain NEUTRAL sector view.
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