- The Wall Street Journal today reported that there has been a surge in the number of Middle East Respiratory Syndrome Coronavirus (MERS-CoV) cases this month, with 15 cases, including two deaths, reported in the space of 4 days.

- In its latest update, the WHO said that it has been informed of 228 laboratory-confirmed cases since the emergence of this virus in September 2012, with 92 of them fatal.

- The onset of the most recent cases has raised concerns about its spread and severity. Interestingly, a similar pattern (i.e. spike in the number of cases in April) was observed last year. The bulk of cases had occurred in Saudi Arabia with cases elsewhere, including Europe, believed to be linked to the Middle East.

- The article also noted that a high number of cases involved medical personnel, which spotlights the measures being taken to control the outbreak. We understand that most patients were infected at healthcare facilities, implying a hospital acquired contraction. Limited human-to-human transmission is understood to have occurred.

- Studies on the virus have revealed that camels were at least one host of the virus. The novel coronavirus is distantly related to the Severe Acute Respiratory Syndrome (SARS) virus which caused an epidemic in Asia back in 2002 and 2003.

- News of this surge comes hot on the heels of press reports which said that YTD, close to 100 people have died from the H7N9 bird flu strain in China. The H7N9 outbreak had begun in early 2013 but remained dormant in the summer months before resurfacing in the autumn/winter months.

- The increasing number of flu outbreaks (currently:- (1) bird flu: H7N9, H10N8 and a lesser known H6N1; as well as (2) swine flu: H1N1 - the dominant strain in US 2013/14 flu season) and the MERS-CoV is generally positive for the rubber glove manufacturers. Should any of it manifests into a global pandemic, there could be an uptick in usage of examination gloves (~90% of total glove exports).

- Separately, a local daily had highlighted the plight of manufacturers in Selangor following the present water rationing exercise. Most of the rubber glove players’ production facilities are located in the state. From our channel checks, we understand that there have been some disruptions but the situation remains under control.

- All in all, we maintain our OVERWEIGHT stance on the rubber glove sector and keep our forecasts unchanged at this juncture. Our top picks remain Kossan Rubber Industries (BUY, FV: RM5.05/share) and Top Glove Corp (BUY, FV: under review). 

Source: AmeSecurities