Wednesday, October 5, 2011

CIMB Research cautious on glove makers' price surge

KUALA LUMPUR: CIMB Equities Research has cautioned that the glove makers's 1% to 17% share price resurgence on Tuesday, Oct 4 in a market that is floundering, is not backed by fundamentals.

It said on Wednesday, Oct 5 that although natural rubber latex prices were easing, they were still elevated.

CIMB Research said that demand was too weak to absorb the glut in capacity and earnings were likely to disappoint.

'As our 2011 forecast of average latex price of RM8.75/kg implies further downside of 10%, it already factors in the prospects of lower costs. The sector remains a NEUTRAL,' it said.

It advised investors to switch from Top Glove to nitrile producer Hartalega which has been overlooked in the excitement.

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