US tariff revision positive for Malaysian glove manufacturers
The firm noted that Malaysia now has the second-lowest tariff among major glove-producing countries, after Vietnam.
"We believe this gives Malaysian exporters a relative competitive edge," it said in a research note today.
"The letter from the US government indicates that the revised tariffs may be reconsidered if Malaysia removes its tariff and non-tariff barriers, trade policies, and other restrictions."
If the 25 per cent tariff is sustained, the firm said purchasing costs for US buyers could increase, potentially dampen buying volumes, and intensify competition in non-US markets.
As of 2024, Malaysia holds the largest share of the global glove market with about 45 per cent, followed by China at 28 per cent and Vietnam at 10 per cent.
Within CIMB Securities' coverage, Hartalega Holdings Bhd and Kossan Rubber Industries Bhd are the most exposed to the US market, with each deriving roughly 50 per cent of their total sales from the US.
By comparison, Top Glove Corp Bhd generates about 24 per cent of its total sales from the US, while Supermax Corp Bhd has more than 20 per cent exposure.
"We believe this move further supports the US agenda to boost domestic nitrile glove manufacturing, a critical personal protective equipment (PPE) product.
"Currently, only three nitrile glove producers operate in the US, supplying just 0.05 per cent of the country's total demand," it added.
Among the glove manufacturers under its coverage, CIMB Securities views Supermax as the key potential beneficiary, given the commencement of its US-based production in the first quarter of 2025 (1Q25).
However, the firm expects the US operations to be loss-making initially, with commercial production from three lines expected by the third quarter of 2025 (3Q25).
Overall, CIMB Securities has maintained a "Neutral" stance on the rubber glove sector due to ongoing headwinds.
These include a challenging operating environment marked by soft demand and elevated costs, following the recent hike in the Sales and Service Tax and minimum wage.
Kossan remains the firm's preferred pick in the sector, with a "Buy" call, while it retained "Hold" calls on Top Glove, Hartalega, and Supermax.
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