Overweight. The operating environment for the glove producers has turned favourable, with falling input costs, a stronger USD and growing demand. Moreover we believe that the sector is a strong proxy to the healthcare sector, given that 90% of total production is medical gloves. Comparatively, the gloves sector trades at 10x 2013 earnings vs. 23x for the regional healthcare stocks. The glove sector is thus due for a rerating. We lift Hartalega to BUY with a higher TP of MYR5.00 (+18%). We reiterate BUYs on Top Glove (TP +7% to MYR6.00) and Kossan.

Click here for full report

Source: Maybank Research - 6 July 2012