At least one Glove Counter in your YEAR 2020 portfolios.The reason were:
1) Ultilisation above 95% due to Covid-19 and get approval to operate at 100% capacity during MCO and also extend to its suppliers.Higher ultilisation will reduce the operation cost.
2) Higher selling prices by 3% to 5%for gloves due to shortage of gloves and the orders for the gloves are up to 6 months ahead. The margin expected higher than H1N1 which range from 20% to 40%
3) Export counter -Stengthening of USD against Ringgit by 5% to 10% will benefit glove counters.
4) Sharp decrease in raw material cost by 1% -5 % used in production of nitrite glove due to low oil price.
5) Capacity expansion by most glove counters.
6) Cut in OPR rate - 50bps by bank negara result in lower interest cost for all glove counters. Expect another 25bps cut in May 2020.
7) Lower electricity by 2% under economic stimulus package for 6 months.