KUCHING: It was reported last week that about 59 pupils in a Selangor school were placed under home quarantine after 47 of them were found with Influenza A (H1N1) symptoms while the remaining 12 had influenza-like illness.
EXAMINATION GLOVES: OSK Research stated that most governments across the globe were promoting hygiene awareness in the hope of averting disease outbreaks.
Although OSK Research Sdn Bhd (OSK Research) was hopeful that the second wave of H1N1 would not hit, it believed this piece of news would fuel demand for examination gloves via increasing hygiene awareness and health alert.
The research house believed that this, together with US President Barack Obama signing into law the healthcare bill covering 32 million uninsured Americans would drive up the share prices of the rubber glove companies.
OSK Research pointed out that although the actual increase in the use of examination gloves was not immediate, the potential for increased usage of gloves in the coming months would prompt healthcare companies to stock up on gloves and plan to place bigger new orders. It stated that this was expected to put more pressure on the supply of gloves and glove makers were already producing at maximum capacity.
It noted that unlike last year the surge in glove usage arose from a recovery in the global economy and the H1N1 pandemic it believed that orders were on the rise because the global population was increasingly becoming more hygiene conscious.
OSK Research stated that most governments across the globe were promoting hygiene awareness in the hope of averting disease outbreaks. It added that some had even set more stringent requirements on the quality of the gloves while others were encouraging more healthcare centres to use them especially the developing countries where the practise of using gloves was minimal or less frequent.
The research house believed the combined hygiene efforts of both individuals and governments would gradually lead to higher glove usage over time. It stated that, in fact, the rubber glove industry was eyeing China and India where the anticipated demand when their governments started to make the use of examination gloves compulsory might lead to demand out-stripping supply as both countries had populations estimated at more than 1.3 billion and 1.1 billion respectively.
OSK Research said that latex price, which made up 50 per cent to 60 per cent of rubber glove manufacturers’ production cost was still high at above RM7 per kilogramme. It pointed out that besides the El-Nino effect, rubber trees were going through a wintering period whereby their production was at the lowest which had caused the latex price to spike and held firm at least until the end of April or May when wintering ends.
The research house stated that, nevertheless, since most of glove makers’ production lines were working at full utilisation and new capacity might only progressively kick in starting the second half of this year, it believed that rubber glove manufacturers would continue to command a price premium on their gloves in clearly what was now a seller’s market.
OSK Research outlined that if demand continues to pick up and lag supply even with new capacity coming on-stream starting the second half of this year, it believed there could be another re-rating on the rubber glove sector. Currently, its top picks remained Top Glove with the target price of RM15.15, Supermax with the target price of RM10 and Kossan with the target price of RM11.30.