• Not a cause for concern. We maintain our NEUTRAL stance on the sector following the news on potential outbreak of Human Metapneumovirus (HPMV) in China. At this juncture, China’s Union health ministry commented that the outbreak is an annual occurrence during winter and that it is safe to travel to China. Premised on this, we view that the seasonal influenza cases would not lead to a surge in glove demand inside and outside of China.

• Nonetheless, should it become prevalent in China, we opine that it would not benefit the local glove manufacturers as China’s glove companies would have the necessary capacities to supply to the country. Note that the news on the potential outbreak takes place coincidentally with the commencement of steep increase in tariff for China-made gloves to the U.S. from 2025 onwards. We have neutral recommendations across all glove manufacturers under our coverage as the run-up in share price since September 2024 has led to stretched valuation. Nonetheless, should there be uptick in share driven by sentiment, we view that it would represent a good opportunity to take profit.

• Another notable virus since Covid-19? China is reportedly experiencing a surge in infections of a respiratory virus. This comes five years after the advent of the Covid-19 pandemic which emerged in Wuhan, China. Nonetheless, the Union health ministry mentioned that there is no substantial increase in the number of cases viral respiratory illnesses in the country in December 2024.

• Premised on the data, influenza is leading the outbreak with 30.2% tested positive. Comparatively, HPMV is only linked to 6.2% of the respiratory illness tests. Note that there is no specific treatment nor vaccine available for it at this juncture. Note that locally, 327 cases of HMPV were detected in 2024, an increase of +45.3%yoy.

• Since the virus has been circulating for some time, it seems that there is more herd immunity against it as compared to a novel virus such the Covid-19 at the beginning of the pandemic.

• Mimicking cold symptoms. According to Cleveland Clinics, HPMV was discovered in 2001 with symptoms like that of common cold, including cough, fever, stuffy or runny nose, sore throat, wheezing, shortness of breath and rashes. The virus can also cause complications like bronchiolitis, bronchitis, pneumonia, asthma or an ear-infection. Children, older adults and people with weakened immune systems are more prone to the virus.

• The U.S. Centers for Disease Control and Prevention (CDC) commented that it is also most common in the late winter and early spring. At this juncture, there is no specific for HPMV. The virus usually spreads via droplets from coughing and sneezing, human contact and touching surfaces and objects contaminated with the virus. Among others, wearing gloves would, to a certain extent, limit the spread of the virus.

• Inadequate to lift glove demand. Given that the risen rise in HMPV is not outbreak, we view that it should not lead to a surge in demand for gloves both in China and globally. Nonetheless, should it lead to an increase in demand in China, we do not think that the Malaysian glove manufacturers would benefit from it. China’s glove players should have ample capacity to cater for the surge, if any, as its export of gloves to the U.S. would be severely impacted from 2025 onwards following the heightened tariff imposition by the latter.

• To recall, the U.S. raised its tariff against China-made medical gloves from 7.5% in 2024 to 50% in 2025 and 100% in 2026. This has made China’s glove uncompetitive as compared to its global peers. That being said, should HPMV or other virus led to a pandemic, we believed that the supply demand dynamics would turn favourably towards our local glove players.

Source: MIDF Research - 6 Jan 2025