Will Glove Demand Sustain after 2021? - Van Gogh Of Financial

Focus: It's always had been the story of vaccine undermining the attraction of gloves 

Will glove demand sustained beyond 2021?

First things first, 2021 capacity for most glove manufacturers are fully booked which means confirm earnings for 12-mths. There are no companies in other sectors that are able to delivery such guidance.

It's confirm that during the analyst briefing, Supermax and Hartalega capacity for 2021 are fully booked as at October 2020.

We are still waiting for Kossan and Topglove to deliver their earnings soon. More will be revealed and we can be fairly confident that their capacity for 2021 is fully booked as well.

Other smaller players such as Careplus, Comfort and Ruberex will be revealing their earnings as well.

Mahsing will be interesting to watch if the company could deploy speed to build, develop and market in next 1-2 years what the Top 5 glove manufacturers had been doing the last 20 years.

How is it that glove demand is so high?

EU warns not enough Covid vaccines for all in Europe until 2022

The 27-nation bloc has a population of 450 million. It has secured more than 1 billion doses of potential Covid-19 vaccines from three drugmakers and is negotiating the booking of another billion vials with other companies. “There will not be sufficient doses of Covid-19 vaccines for the entire population before the end of 2021,” a European Commission official told diplomats.

https://www.cnbc.com/2020/10/27/eu-warns-not-enough-covid-vaccines-for-all-in-europe-until-2022.html

Covid hospitalizations rising in 36 states as U.S. hits another record for average new cases

The average number of patients hospitalized with Covid-19 over the past seven days rose by at least 5% in 36 states as of Monday, according to a CNBC analysis of data from the Covid Tracking Project. “This is a harbinger of a very tough winter that’s coming,” Dr. Bill Schaffner, an epidemiologist at Vanderbilt University, said in a phone interview. Over the past seven days, the U.S. reported an average of 69,967 new cases every day, the highest seven-day average recorded yet, according to a CNBC analysis of Johns Hopkins University data.

https://www.cnbc.com/2020/10/27/covid-hospitalizations-rising-in-36-states-as-us-hits-another-record-for-average-new-cases.html

Supermax:

Yesterday Supermax’s net profit soared to RM789.5mil from RM24.7mil made a year ago, as revenue jumped to RM1.35bil. Supermax also said it was exploring the options of a dual listing on the Singapore Exchange (SGX).

Supermax said it has put in place expansion plans to build a total of five glove manufacturing plants between now and 2022. This will yield an additional production capacity of 22.25 billion, making a total of 48.42 billion gloves by end-2022. Supermax will invest a total capital expenditure of RM1.39bil for the new plants.

Supermax is reinvesting the earnings derived from our distribution centres into the respective countries in particular in the United States and the United Kingdom. The company is now in the planning stages and will kick-start the US and UK projects in 1H2021 and target commission in stages starting 1H2022.

The capital expenditure earmarked for the US is US$300 million for phase 1 and US$250 million for phase 2, totalling US$550 million, and for the UK, it is £50 million. 

Hartalega:

Hartalega net profit jumped 424% to RM544.96mil in the second quarter ended Sept 30, from RM103.86mil a year ago, riding on the surge in demand due to the Covid-19 pandemic. The glove maker reported higher revenue by 89.7% to RM1.34bil from RM709.42mil. Its earnings per share were 15.95 sen compared with 3.09 sen.

In the first half, its net profit rose by 286% to RM764.67mil from RM197.93mil in the previous corresponding period. Its revenue increased by 67.9% to RM2.26bil from RM1.35bil a year ago. The group’s performance was propelled by higher sales revenue on the back of increased sales volume and higher average selling price. This was further supported by improved production efficiency.

Hartalega marked a critical milestone this month with the completion of plant six of its Next Generation Integrated Glove Manufacturing Complex (NGC).

Hartalega’s operational efficiencies and project management capabilities were able to bring plant six fully on-stream one year ahead of schedule. Moving forward, plant seven which caters to specialty products is in the expansion pipeline and will add an annual installed capacity of 2.7 billion pieces.

The company will also be embarking on construction of plants eight to 11 on land acquired adjacent to the NGC, which will increase their installed capacity with the addition of 19 billion pieces per annum once completed.

Hartalega's longer-term expansion will be driven by NGC 2.0, with the first production line targeted to be commissioned in the calendar year 2022. NGC 2.0 will ntailed seven production plants, comprising 82 production lines with an installed capacity of 32 billion pieces of gloves. The completion of this expansion will bring the group’s total installed capacity to 76 billion pieces per annum.