CleanGloves

The Hidden Gem in Malaysia's Glove Industry Recovery - Yew Lee Pacific Group

younglean
Publish date: Thu, 07 Dec 2023, 01:23 PM

Image: The Star

As Malaysia's four major glove manufacturers – Hartalega Holdings, Supermax Corporation, Kossan Rubber Industries, and Top Glove Corporation – show signs of recovery with narrowed losses, investors are turning their attention to potential beneficiaries of this resurgence. A key player emerging in this context is Yew Lee Pacific Group Berhad (KLSE: YEWLEE), known for its industrial brushes vital to glove production.

A Closer Look at the Glove Industry's Current Dynamics

While recent reports indicate a robust rebound in profitability for these glove giants, largely attributed to bottoming out Average Selling Prices (ASP), the journey is still fraught with challenges. Notably, a one-off, non-cash impairment has dampened the financial performance of these Top Glove Corporation.

Why Focus on Yew Lee Pacific Group?

Market Share and Clientele. With a significant 12.4% market share in Malaysia's industrial brush market, as stated in their FYE2021 report, Yew Lee Pacific Group stands as a leading manufacturer in this niche. The majority of their clients are from the glove manufacturing sector, making Yew Lee's fortunes closely tied to this industry.

Industrial Brushes as Consumables. These brushes are essential consumables in glove production. Thus, any uptick in glove production volumes directly translates into increased demand for Yew Lee's products.

Image: Yew Lee Pacific Group’s Quarterly Report

Image: Yew Lee Pacific Group’s Quarterly Report

Strategic Expansion: Yew Lee's New Thailand Venture

Yew Lee Pacific Group is not resting on its laurels. The company is planning to establish a new subsidiary in Thailand. This strategic move, involving a revision of IPO proceeds, suggests a keen insight into the growing demand from the glove industry in Thailand. Such expansion could further cement Yew Lee's position in the regional market.

Investment Considerations

While the direct glove manufacturing companies are on a recovery path, it's crucial for investors to consider associated industries that stand to benefit. Yew Lee Pacific Group represents such an opportunity. However, it's essential to understand that the current market scenario indicates a recovery in production volume, not necessarily in price. This nuance is crucial for making informed investment decisions.

Conclusion

As Malaysia's glove industry shows signs of revival, Yew Lee Pacific Group emerges as a potentially lucrative investment opportunity, capitalising on its niche in industrial brushes. Investors seeking to benefit from the glove industry's recovery might find Yew Lee an attractive proposition, especially given its strategic expansion plans and established market presence.

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Chang Keit Siong

Thanks but stop pushing for your own stock calvin

2 months ago

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