KUALA LUMPUR (April 21): US tariffs on China-made gloves can help Malaysian players expand its market in the world’s biggest economy, but are not sufficient to reverse the structural oversupply challenges in the global glove industry, said AmInvestment Bank (AmInvest).

Despite recent selldown in local glove stocks and optimism over “firmer” average selling prices (ASPs) of rubber gloves in the US, AmInvest maintained its 'underweight' call on the sector.

In a research note, AmInvest projects supply to exceed demand through 2026, and only reach equilibrium in 2027. That is on the premise of 9% growth in demand per year in 2025-2027, down from 11% in 2024.

“We remain cautious as supply dynamics, cost inflation, and strategic shifts by Chinese players continue to weigh on sector fundamentals,” it said.

The firm lowered its target price for Hartalega Holdings Bhd (KL:HARTA) to RM2.30, from RM3, as it reduced the valuation multiple to 17 times price-earnings ratio from 22 times, as “intensifying competition in the US market may erode its premium pricing over the medium to long term”.

“In an already oversupplied global market, the dynamics will limit the ability of non-Chinese manufacturers to meaningfully and sustainably increase ASPs, even in the US,” it said.

The glove market remains structurally oversupplied, it said, as most manufacturers “have not meaningfully scaled back capacity” post-pandemic.

“With total global installed capacity still significantly above annual demand, pricing discipline is unlikely to return in the near to medium term,” it added.