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Business Times
6 days ago
- Business
- Business Times
Beyond polar bears: How nature-related financing can help companies be more resilient
[SINGAPORE] A cracked, parched earth. Bare trees and withered crops. Emaciated livestock. That is often the image one has when a drought occurs. An image that is often far flung from the day-to-day realities of many people. However, glovemakers in Malaysia felt its effects very keenly in 2014, after a water rationing exercise – a response by Selangor state to a prolonged drought – raised their costs and disrupted production. Top Glove's chief executive officer at the time, Lim Wee Chai, said then that the company may be forced to halt production, should the situation continue. The company subsequently invested RM15 million (S$4.6 million) to set up water treatment plants that could provide reverse osmosis to operating facilities, to reduce its reliance on municipal water. It also implemented other measures to enhance its water resilience, such as harvesting rainwater as a sustainable water source, as well as introducing water recycling in its factories. Glovemakers' dependency on water is an example of why there needs to be a rethink on nature's relationship with how people live and work, and how companies conduct their businesses, said UOB chief sustainability officer Eric Lim. A NEWSLETTER FOR YOU Friday, 12.30 pm ESG Insights An exclusive weekly report on the latest environmental, social and governance issues. Sign Up Sign Up 'Some people may think of nature as polar bears and trees, and less of water, air, land, atmosphere – drinkable water, arable land, breathable air,' he said. 'These are the natural capital that is all around us, and essential inputs to our daily lives and business models.' It goes back to how people and companies use water, air and land – forms of natural capital that have sustained humanity and socio-economic growth at almost zero or low cost for millennia, yet are often overlooked. To this end, UOB published its nature strategy in March this year, as it believes it should help clients start thinking about how their business models interact with these natural ecosystem services. It is about integrating nature into economic value chains, and not just viewing it from a restoration or conservation perspective, said UOB's Lim. There are a few reasons why the bank has embarked on such a strategy. First, the strain on natural capital is only going to increase, and companies will inevitably face growing demands to embed nature-related risks and opportunities in their strategy and business operations. The sustainability sector is already seeing greater focus on natural capital. While not yet a regulatory requirement, companies and investors are already starting to pay more attention to nature-related disclosures, such as those recommended by the Taskforce on Nature-related Financial Disclosures. Second, it would actually be costlier to replace the infrastructure capabilities that the earth's ecological assets naturally provide, if nothing is done to sustain them. 'The ability to retain soil for stable foundations, control pests, moderate temperatures – if nature can no longer do all of these things for us, we will have to build expensive infrastructure to replicate them,' said UOB's Lim. Nature-related financing To support companies looking to integrate nature into their business, it would be helpful to broaden the scope of nature financing. While nature-related financing has typically been associated with conservation or restoration projects – termed as nature-positive finance – UOB's Lim said that it should also include business activities that avoid or reduce pressure on nature. These are beyond the environmental impact assessments conducted for the assets that UOB finances, as part of its responsible financing and due diligence requirements. The Singapore Sustainable Finance Association recently published a white paper on nature financing that advocated for the same. UOB's Lim is co-lead for the association's natural capital and biodiversity workstream. According to UOB's latest sustainability report – in which the bank outlined its nature strategy for the first time – 60 per cent of its sustainable finance portfolio already takes nature-related issues into account. And this is just from a baseline of fulfilling current regulatory expectations on waste and water pollution, as well as the certification for green buildings by the Building and Construction Authority. Already, the bank has in place several frameworks relating to sustainable trade finance, greening built environments as well as circular economy business models. But there is a lot more to scale, and that is where the growth opportunity is, said Lim of UOB. 'And we're keen to continue scaling our financing towards the real-economy activities that either reduce pressure on nature or are nature-positive, and to continue to create positive impact,' he added. Sustainable trade and sustainability-linked loans would be the UOB's main avenues to help support companies intending to pursue their own nature strategy. In fact, Lim of UOB believes that sustainability-linked loans with nature-focused performance targets are likely to take off first, as companies show that they are increasing their effective and responsible use of natural capital. With its strategy and products now in place, UOB is looking to engage with real-economy sectors and a broad range of stakeholders – including corporates, financiers, asset managers and regulators – to assess key natural capital issues and vulnerabilities, identify sectors for collaboration and develop an action plan for these sectors. This entails exploring if there are regulatory levers that can be enhanced, as well as the scope of real-economy activities that companies can embark on that banks are willing to finance. Given that Singapore is a highly urbanised city-state where ensuring food security is a priority, UOB believes the key industries that will matter to the country would be the built environment and agriculture. One nature-related topic that can also be further developed in Singapore is water. This is especially so considering that it is another key priority for the city-state, and an issue that cuts across various types of industries. Ultimately, integrating nature into the economy is not just about incorporating resilience into physical infrastructure; it should also be applicable to business models within and beyond the shores of Singapore. 'As changes in natural capital continue to place stress on these value chains, are our business models and the assets we own resilient and properly adapted to these changes?' said UOB's Lim. However, while companies can try to ensure resource efficiency and circularity in their operations, it would not take off on a large-scale if governments do not create an enabling environment. Nevertheless, nature and its related financing opportunities are still nascent, he said. 'There is a huge potential for us to continue to grow the opportunity in nature financing, as governments as well as real-economy sectors continue to become more sensitised to our reliance on nature. This therefore provides opportunities to build assets and business models that embed resilience and sustainability.'
Free Malaysia Today
22-05-2025
- Business
- Free Malaysia Today
Supermax downgraded after RM24mil loss in Q3
Year to date, Supermax shares have crashed 43% in tandem with other local glove makers which have also seen similar drops. (Bernama pic) PETALING JAYA : Supermax Corp Bhd was slapped with downgrades by research houses after posting a larger-than-expected loss in its third quarter ended March 31 (Q3 FY2025). The glove maker's net loss widened to RM23.81 million from RM686,000 a year ago, its ninth quarterly loss out of its 10 most recent quarters. The loss was primarily due to higher operating expenses and a RM12.7 million unrealised foreign exchange loss following the depreciation of the US dollar against the ringgit. For the first nine months of FY2025, it posted a bigger net loss of RM93.36 million from RM47.1 million a year ago, while revenue rose 34.4% to RM627.11 million from RM466.53 million. The disappointing results announced yesterday spooked investors, with the stock falling as much as 3 sen or 4% to 69.5 sen today, its lowest level in nearly two months. Year to date (YTD), the shares have crashed 43%. The plunge is of a similar magnitude with other local glove makers such as Top Glove Corp Bhd (-37% YTD) and Kossan Rubber Industries Bhd (-41%), which have been hammered by Chinese rivals flooding the global market to counter the sharp drop in orders from higher US tariffs. Within Malaysia, glove makers are struggling with high energy costs and labour shortages due to a freeze on foreign worker intake. This puts them at a distinct disadvantage to countries like China, Thailand, Vietnam and Indonesia, which have lower operating costs. To remain competitive, the local players are focusing on automation, improving efficiency and cutting costs. RHB Research has downgraded Supermax to a 'sell' from 'neutral', and lowered its target price to 64 sen from 72 sen previously, a 12% downside. Frontloading effect in US market In a note today, the research house said it expects Supermax to remain in the red for the subsequent quarter, no thanks to the impact of a weakening greenback coupled with subdued average selling prices (ASPs). It said higher ASPs were offset by a fall in sales volumes, attributing it to the 'frontloading effect' as Chinese glove makers flooded the US market ahead of the 50% import tariff implementation. 'The group estimates that this inventory stockpiling by US customers will take six to eight months to deplete before the resumption of usual stock replenishment,' it added. Given the subdued outlook, RHB expects Supermax's upcoming quarterly results to likely be weaker quarter-on-quarter on the back of a sluggish demand outlook, glove makers' inability to raise ASPs, and the effect of a weakening US dollar. CIMB Securities has also downgraded Supermax to 'hold' from 'buy' and expects sustained losses for at least the next 12 months, amid a tougher operating environment. It said the group could remain loss-making until its financial year ending June 30, 2026 (FY2026) due to continued start-up losses from its US glove manufacturing plant. Supermax is the only Malaysian glove company to have set up a manufacturing plant in the US. The facility in Houston, Texas, commenced production in January this year. To be built over four phases, the plant will have an annual production capacity of 19.2 billion pieces of gloves when fully completed. The current phase one entails capital expenditure of US$350 million (RM1.5 billion). Supermax was founded by its executive chairman Stanley Thai and his wife Cheryl Tan in 1987. The group produces over 24 billion gloves a year and exports to about 165 countries.
Reuters
08-05-2025
- Business
- Reuters
Malaysia's March industrial production up 3.2% y/y, above forecast
A worker works at a production line in Top Glove factory in Shah Alam, Malaysia August 26, 2020. REUTERS/Lim Huey Teng/File Photo Purchase Licensing Rights , opens new tab KUALA LUMPUR, May 8 (Reuters) - Malaysian industrial production (MYIP=ECI) , opens new tab rose 3.2% in March from a year earlier, above market expectations, government data showed on Thursday. March's factory output had been forecast to expand 2.0%, according to a Reuters poll. The Reuters Tariff Watch newsletter is your daily guide to the latest global trade and tariff news. Sign up here. Reporting by Kuala Lumpur newsroom; Editing by John Mair Our Standards: The Thomson Reuters Trust Principles. , opens new tab Share X Facebook Linkedin Email Link Purchase Licensing Rights
Business Times
06-05-2025
- Business
- Business Times
Malaysia gains US glove share as China hit by tariffs; Top Glove to benefit
[KUALA LUMPUR] Malaysia is poised to claim more than half of the US' rubber glove market this year, with its share expected to rise to 55 per cent – up from just over 47 per cent in 2024 – on the back of fresh US tariffs on Chinese-made gloves, said a top official. Investment, Trade and Industry Minister Tengku Zafrul Aziz said on Tuesday (May 6) that the change is opening doors for Malaysian exporters, as US buyers pivot to tariff-free and cost-competitive suppliers. Speaking at a quarterly briefing, he said that the country's glove industry – already the world's largest – stands to gain significantly from ongoing trade realignments. Washington's higher tariffs on Chinese products are also creating opportunities for other Malaysian exports, he added. Malaysia exported RM15.4 billion (S$4.7 billion) worth of rubber gloves in 2024, and its industry players are 'competitive and ready to meet increased demand', the minister noted. Its shipments to the US amounted to more than RM7.4 billion, making Malaysia one of the top five rubber exporters to the country. The US glove market is expected to reach nearly US$4.2 billion by 2030, said Malaysia's Ministry of Investment, Trade and Industry. UOB Kay Hian estimates that as at December 2024, Chinese gloves made up 42 per cent of US medical glove imports, just behind Malaysia's 44 per cent share. A NEWSLETTER FOR YOU Friday, 8.30 am Asean Business Business insights centering on South-east Asia's fast-growing economies. Sign Up Sign Up With US glove consumption projected to climb to between 90 billion and 100 billion pieces in 2025 – up from 70 billion to 75 billion in 2023 – the gap is expected to widen in Malaysia's favour as tariffs push demand away from China. According to an earlier report by The Straits Times, China-made gloves were priced around US$15 per 1,000-piece carton. Meanwhile, Malaysian gloves were sold at a range between US$17 and US$18 per carton. On Apr 2, the US imposed a 24 per cent tariff targeting Malaysian goods, alongside a broader 10 percent duty on imports from all countries. While the Malaysia-specific tariff is under a 90-day suspension for negotiations, the global levy continues. In contrast, tariffs on Chinese goods remained at 145 per cent. Malaysia is home to some of the world's largest rubber glove manufacturers, including Top Glove, Hartalega, Kossan Rubber Industries, and Supermax Corp. Top Glove commands a substantial global market share, estimated at around 25 per cent. Meanwhile, Tengku Zafrul said that a government support package for industries affected by global trade shifts and reciprocal tariffs was being finalised and would be announced by July. 'The priority now is to engage with affected companies to assess the supply chain impact,' he noted. The package, announced in part by Prime Minister Anwar Ibrahim on Monday, includes an additional RM1 billion in guarantees under the Business Financing Guarantee Scheme to help small and medium-sized exporters access commercial loans.
