How it Begins?

Singapore has reportedly seen a resurgence of a new COVID-19 sub-variant, nicknamed "FLiRT," with cases expected to increase to 25,900 in the past week. Despite being supported by strong infrastructure and a reserve of medical supplies, this has still sparked concerns over a potential resurgence of COVID-19..

Figure 1.0: Price performances of glove companies in Bursa Malaysia

Additionally, the White House in the United States has announced increased tariff rates on medical products. These tariffs include an increase from 0% to 50% on syringes and needles in 2024, selected respirators and face masks will see an increase from 7.5% to 25% in 2024, and rubber medical and surgical gloves will experience a significant spike in tariffs to 25% in 2026 from the current 7.5%.

Figure 1.1: Glove manufacturing line by AMMEX

Furthermore, our channel checks with local glove manufacturers indicate that key market inventory levels have been depleting, suggesting better performance for the sector.

Who’s the ‘Hidden Gem’?

The share prices of glove-related companies have increased significantly. However, this company, which is the backbone of the glove industry, has yet to see any significant move in its share price in the past trading weeks.

Figure 2.0: Price performance of Flexidyanmic Holdings Berhad

For the uninitiated, Flexidynamic Holdings Berhad (KLSE: FLEXI) is principally involved in the design, engineering (including the manufacturing of off-line chlorination systems and centrifugal fans), and sourcing of parts and components for glove chlorination projects. Below is an example of how the line would look like:

Figure 2.1: Illustration of Flexi's involvement in the glove manufacturing line

Essentially, Flexi is the backbone of the strongly recovering glove sector.

Conclusion

Despite being surrounded by positive developments, the market capitalization of Flexi remains on the lower end at RM60.0 million. However, we have observed a strong private equity fund starting to invest in the company and seemingly bringing in infrastructure projects. We believe Flexi has huge potential given the nature of its business and the recovering prospects for the industry.

Disclaimer

The information provided in this article is for educational and informational purposes only and should not be considered financial advice. Investing in stocks involves risks, including the loss of principal. Always conduct your own research and consult with a qualified financial advisor before making any investment decisions. The author holds no responsibility for any investment decisions made based on the information provided.