Top Glove’s position as the world’s largest glove manufacturer serves as a competitive advantage over other major glove manufacturers. — Reuters photo
KUCHING: Top Glove Corporation Bhd (Top Glove) may be affected by the higher competition in the latex segment, analysts opine.
However, the group’s position as the world’s largest glove manufacturer serves as a competitive advantage over other major glove manufacturers.
According to the research arm of Kenanga Investment Bank Bhd (Kenanga Research), intense competition in latex may more than offset uptick in nitrile demand.
“Looking ahead, the keen competition in the latex segment could negatively impact latex gloves margin,” Kenanga Research said.
“Although we are positive on growth in subsequent quarters underpinned by uptick in nitrile demand driven by re-stocking activities, the group is plagued with competitive pressure from low margins latex gloves (accounts for estimated 50 per cent of product mix) which could offset the gains in the nitrile segment.
“The robust demand for nitrile gloves led to longer delivery lead times to between 45 to 50 days as compared to 30 to 40 days previously.”
On the other hand, the research arm of MIDF Amanah Investment Bank Bhd (MIDF Research) viewed that the group’s outlook will continue to be underpinned by stable and steady growth in demand of disposable medical glove as health regulations become more stringent. In addition, MIDF Research expected finance cost to remain elevated as the expansion will be funded via borrowings.
“That said, we believe that the diversity of its existing product range as well as Top Glove’s position as the world’s largest glove manufacturer serves as a competitive advantage over other major glove manufacturers,” the research arm said.