Posted by TiongBahru > 2016-07-08 20:28 | Report Abuse

Hi Ricky. With all due respect, I looked at the same argument in 2009/2010 when there were a lot of announcements of capacity expansion. The future increase in capacity did worry me as an investor back then. In hindsight, however, much of the online capacity were nicely absorbed by the market. Your analysis is good. But it would be better if you could show us the demand side economics

Posted by Ricky Yeo > 2016-07-08 20:52 | Report Abuse

Hi TiongBahru thanks for the reminder, I've added a few more comments on that. If you are interested to read more http://latticework.com/hidden-champions-asia/

Posted by Shellhouse > 2016-07-08 21:29 | Report Abuse

excellent writing.

Posted by value88 > 2016-07-09 07:48 | Report Abuse

Great article analysing and explaining boom & bust cycle of an industry.

The grove demand is world-wide so it may not has the sudden surprise like dry bulk industry when a single country, i.e. China, slows down. However, I do agree the coming supply is greater than predicted annual demand growth rate, so yes, the profit margin will be squeezed and we will see grove companies not doing as well in coming 2-3 years.

Posted by soojinhou > 2016-07-09 08:14 | Report Abuse

Thanks Ricky, was thinking of taking a look into glove companies until the president of glove association told the players not to expand wantonly. That's a warning all the capacity increase on the cards are probably excessive and we will see intense competition ahead.

Posted by popo92 > 2016-07-09 11:21 | Report Abuse

Preparing for future demands always lead to a oversupply temporary, especially when everyone is doing it. excellent article.

Posted by bsngpg > 2016-07-09 16:53 | Report Abuse

M'sia gloves makers have big advantage with their highest productivity in the world, proven with the biggest market share thus far. If the view of the author on oversupply is right, its consequence to M’sia gloves makers would not be as described by him. Those gloves makers with poorer productivity such as those in Indo, Thai , Vietnam, Sri Langka have to take the toll of the oversupply before the wave threatening those in M’sia especially the top three. SuperM is not in the league.

The same development happened many years ago, the first round of victimized gloves makers were small manufacturers such as SPI, Sime, Mbf etc and the second round were those of GLC such as KC, Ansell, Card. etc.

Posted by bsngpg > 2016-07-09 16:55 | Report Abuse

Anyway, it is a good write up. Thanks and keep up the good job.