KUALA LUMPUR: CIMB Equities Research said despite the potential hiccups, it remains positive on the rubber glove sector and retain its OVERWEIGHT call.
It said on Tuesday, June 22 the outlook for rubber gloves remains positive as demand is still set to rise by at least 8-10% p.a., led by growth in the usage of medical gloves in emerging countries.

CIMB Research said the results announced during Apr- Jun proved that the rubber glove is a resilient sector and that cost changes have minimal impact on margins due to the transparent method of passing on the previous month?s average latex price and RM:US$ exchange rate to customers.

?We expect earnings for rubber glove players to continue heading higher this year, especially given the additional capacity that is coming in. We make no changes to our earnings forecasts or Outperform calls for all the rubber glove players,? it said.

Its top picks remain are Supermax which sells most of its gloves under its own brand which allows it to command higher margins and gives it a strong presence in markets such as the US and Brazil.

It added that Latexx is well on course for continued growth, thanks to its aggressive expansion and move into the premium segment.
?Our Outperform call remains intact, along with our target price of RM5.44, which we continue to base on an 11.6x P/E or a 30% discount to Top Glove?s target P/E of 16.5x,? it said.