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Focus Malaysia
4 days ago
- Business
- Focus Malaysia
Muted recovery outlook for Malaysian glove makers as sales volumes decline
THE Malaysian glove sector remains under pressure as persistent oversupply, cautious customer sentiment, and pricing competition continue to weigh on recovery prospects. The latest quarterly results from glove manufacturers under Public Investment Bank (PIB)'s coverage reflected a sequential decline in sales volumes, mainly due to earlier frontloading activities by US customers. 'We gather that customers remain cautious, with most adopting a wait-and-see stance, delaying sizeable purchases amid uncertainty from changes in tariff policy,' said PIB. In light of subdued demand visibility in the near term, PIB downgrades their sector call to Neutral from Overweight. The recent results from Malaysian glove manufacturers under their coverage indicate a quarter-on-quarter (QoQ) decline in sales volume, primarily due to earlier frontloading activities by US customers. While tariff adjustments have narrowed the average selling price (ASP) gap between China and Malaysia, China's glove prices remain relatively uncompetitive in the US market (USD27/1k pcs vs. Malaysia's USD20/1k pcs at an 80% tariff). However, the recent invocation of emergency powers has prevented President Trump from enacting broader tariff hikes. Assuming a more conservative scenario where China faces only a 10% reciprocal tariff, China's ASP will be at USD24/1k pcs, significantly closing the pricing gap with Malaysia. Additionally, Chinese producers may absorb part of the tariff cost to defend market share. This will likely keep global ASPs subdued and limit near-term recovery for Malaysian glove makers. Despite losing market share in the US market, Chinese glove manufacturers are aggressively increasing market share in the non-US market especially EU, pricing as low as USD14-15/1k pcs. China is currently expanding capacity outside of China in a bid to retain global competitiveness. 'We observed a 6% decline in natural latex, while nitrile butadiene prices fell by 22% between April – May 2025 compared to the Jan – March 2025 period,' said PIB. While this provides some buffer to sustain operating margins, it also limits the potential for upward revision in ASPs. We anticipate that overall raw material prices to stabilise in the second half of 2025. Meanwhile, USD has weakened against MYR to 4.30 level in May. Nevertheless, PIB does not anticipate any material impact on operating costs or profitability, as USD-quoted raw material costs only constitute 30% of total costs. Any cost savings in ringgit term will act as natural hedge against a lower translated revenue. The Malaysian glove sector remains under pressure, dragged by ongoing oversupply and subdued demand visibility. Key customers continue to adopt a cautious, wait-and-see approach, holding back on large-volume orders amid lingering market uncertainty. Meanwhile, raw material costs are trending lower, providing some cost relief but limiting the upside potential for ASPs. Given the subdued near-term outlook, PIB downgrades the sector rating to Neutral. —June 6, 2025 Main image: ASEAN Briefing
Malay Mail
03-06-2025
- Business
- Malay Mail
Back in black: Capital A jumps as net profit, restructuring lift sentiment
KUALA LUMPUR, June 3 — Capital A Bhd has emerged as an active stock today, with its share price rising over four per cent following its strong first quarter of 2025 (1Q 2025) performance, which saw the company's turnaround with a net profit. The group returned to the black with a net profit of RM689.57 million in the 1Q ended March 31, 2025, from a net loss of RM91.55 million in the previous corresponding quarter. In a research note today, Public Investment Bank Bhd (PIVB) said that with the group's restructuring plan on track for completion by June 2025, which provides a clear roadmap to operational recovery, it believes Capital A is well-positioned to capitalise on growing regional travel demand. 'Capital A's corporate exercises are nearing completion with the disposal of the aviation business, and the Practice Note 17 (PN17) regularisation is anticipated to be completed by June 2025,' it said. PIVB said that pending conditional precedence requirements to be fulfilled include RM1 billion placement, consent from the Stock Exchange of Thailand, and consent from four aircraft lessors and two banks. 'As such, we reiterate our 'outperform' call on Capital A, with an unchanged target price (TP) of RM1.57,' it said. PIVB noted that the group's aviation unit is poised to continue benefiting from a stronger ringgit and lower jet fuel prices, while the reactivation of the grounded fleet and loan refinancing could also ease costs further by 3Q/4Q 2025. Meanwhile, PIVB added that Capital A's non-aviation units, particularly Teleport and Santan, are expected to contribute more significantly in the coming quarters. At 10.16am, Capital A's share price rose by 4.0 sen to 89 sen with 10.51 million shares traded. — Bernama
Malay Mail
19-05-2025
- Business
- Malay Mail
Investment banks see BNM cutting OPR by 25 points in second half of 2025 as tariffs, weak GDP weigh on outlook
KUALA LUMPUR, May 19 — Investment banks expect Bank Negara Malaysia (BNM) to lower the Overnight Policy Rate (OPR) by 25 basis points (bps) in the second half of 2025 (2H 2025) amid softer first quarter (1Q) growth and tariff disruptions Public Investment Bank Bhd said the earlier 100 bps reduction in the Statutory Reserve Requirement (SRR) is expected to serve as a timely liquidity buffer, allowing BNM to maintain a data-dependent stance amid elevated external volatility. Should the 90-day tariff suspension lapse without renewal, raising Malaysia's effective tariff exposure to 24 per cent, the investment bank anticipated a more front-loaded policy response, comprising two 25 bps OPR cuts in 2H 2025. 'This would be intended to mitigate negative spillovers on trade performance, investment activity and broader economic sentiment. 'With three scheduled policy meetings remaining this year — July 9, Sept 4 and Nov 6 — the window for calibration remains open, though timing will depend on incoming data and developments surrounding global trade negotiations,' it said in a note today. Meanwhile, Hong Leong Investment Bank said the projection was made in view of external uncertainties and modest inflationary environment. As for Standard Chartered (StanChart), it continued to expect BNM to cut the policy rate by 25 bps in July, with more cuts (beyond 25 bps) in 2025 likely if data deteriorates by more than expected. The bank has lowered its 2025 gross domestic growth (GDP) growth forecast to 4.2 per cent from 5.0 per cent previously on weaker-than-expected 1Q GDP growth and tariff disruptions. 'We estimate that a 24 per cent and 10 per cent reciprocal tariff rate will subtract 0.7 percentage point (ppt) and 0.4 ppt respectively, from GDP, assuming that 30 per cent of Malaysia's exports are exempt from tariffs and a United States (US) import elasticity rate of 0.5 times. 'The hit to GDP from a fall in demand of trading partners will also likely weigh on growth in 2025,' it said. Nevertheless, StanChart expects consumer spending and investment are likely to remain the key pillars of growth in 2025. — Bernama
