KUALA LUMPUR: Public Investment Bank (PublicInvest) believes Malaysia's rubber glove sector is treading water by slashing annual sintalled capacities.
The three glove players under PublicInvest's coverage, namely Top Glove, Hartalega and Kossan Rubber, recently slashed annual installed capacities by decommissioning outdated facilities.
" We believe this should partly help to ease the prevailing excess capacity condition in the market. However, we continue to believe that the industry's overall utilisation rates will remain below the breakeven levels due to weaker global demand for gloves, the research firm said.
Moving into the second half of the calendar year 2023, PublicInvest is not expecting a meaningful turnaround in profitability.
"Losses should persist on the back of pricing pressure from China, muted demand as well as elevated electricity and labour costs," it elaborated.
PublicInvest has revised upwards its net loss forecasts for Hartalega and Top Glove for calendar year (CY) 2023 and reduced their earnings estimates for CY2425F.
It has also cut its earnings forecast for CY23-25F for Kossan.
PublicInvest has a target price of RM1.70 for Hartalega, 63 sen for Top Glove and RM1.08 for Kossan.