PublicInvest downgrades rubber gloves sector to ‘underweight’
KUALA LUMPUR: PublicInvest research has downgraded the rubber gloves sector to “underweight” from “neutral” as it expects price-earnings contraction to continue.
“Despite the recent selldown, we believe the sector is still trading at unattractive PE valuations and could potentially contract closer to historical average of 21x-26x (previously we pegged our valuations at 24x-33x forward earnings).
“In addition, we cut the sector’s FY19-20F earnings by 3%-14%,” it said in a note.
The research house said there would be capacity expansion in the sector over the near term to meet the surge in demand for latex and nitrile gloves due to the vinyl gloves disruption in 2016/2017.
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