Many news are showing countries like USA are running out of gloves and have to purchase even more to overcome the incoming shortage.

 

Glove manufacturers have to put in an even more extra hours to make much more gloves for other countries demand. More and more glove manufacturers are also popping up in order to meet the demand of other countries. Some existing glove manufacturers are also planning increase their lines in order to produce more gloves. What does this mean for the glove counter share price? One word. Upward. Why?



Picture taken in Phuket. (Bangkok Post)

The price of gloves sold to other countries may increase over time and that will be due to higher demand, limited production capacity and limited amount of rubber latex materials to produce it. The glove manufacturers did not produce it out of thin air. Are rubber estate profiting more? Yes. Infact they will also earn an increase of profit by at least 3.19% (1). However the real winner will still be the glove manufacturers who will earn a much bigger slice of profit. 

 

At least 60% of the global glove demands are ordered in Malaysia as referenced in careplus annual report (2). It is reported Malaysia has already exported at least 220 billion gloves in year 2020 compared to 188 billion in year 2019. I strongly an expected of at least 350 billion glove will be in demand globally in year 2021.

Despite the good news of Pfizer vaccine, there is still the problem in logistics of transporting and storing vaccines. At the moment, the storing is a huge issue and many requires dry ice (3). Getting them from the factory gate to the patient's arm are crucial. And as most vaccines are likely to require two doses, the whole chain needs must be repeated within weeks. There is no one in the world that is prepared to manage the vaccines due to the "dry ice" issues.

 

In conclusion, in my opinion the share market of the glove companies is expected to perform well in year 2021.

Reference:

1. https://www.bangkokpost.com/business/1995183/rubber-rising-on-glove-and-tyre-demand

2. https://careplus.com/investor-relations/annual-reports/

3. https://edition.cnn.com/2020/11/21/world/coronavirus-vaccine-dry-ice-intl/index.html