AmBank 'overweight' on Malaysia's glove makers

AMBANK has maintained its "overweight" call on Malaysia's glove sector and raised its fair value (FV) of Top Glove - the world's largest rubber glove maker.

This comes as it expects the sales volume and average selling price (ASP) of gloves to "grow exponentially" in the second-half year amid the Covid-19 pandemic, wrote AmBank analyst Nafisah Azmi in a sector report on Tuesday.

"We believe that selling prices will continue to soar in the next six months as lead time stretches up to 12 months. The glove companies' earnings will be further boosted by expanded margins as raw material prices remain low, selling prices continue to grow, US dollar (USD) continues to strengthen over the Malaysian ringgit (MYR), and expansion plans remain intact for the glove producers," said Ms Nafisah.

In the light of the recent spike in Covid-19 cases worldwide, AmBank has raised its ASP assumptions for Malaysia-listed glove producers including Top Glove, Hartalega and Kossan.