Posted by Patron > 2 weeks ago | Report Abuse

Gloves Sector Flash Update (UOBKH)

USTR Raised China Surgical Gloves Tariffs to 50-100%

In a 105-pages official announcement just released, the Office of the United States Trade Representative (USTR) announced final modifications on the statutory review of earlier tariff actions on China.

This is an update from earlier proposed modifications announced in May 2024.

Key updates are on: new timing and tariffs rates on face masks, medical gloves, needles, and syringes. Also includes: i) a proposal regarding coverage of additional tungsten, wafers, and polysilicon tariff lines; ii) an exclusion for ship-to-shore cranes ordered prior to May 2024; iii) an expansion of the scope of the machinery exclusions process; iv) and modification of the coverage of proposed exclusions for solar manufacturing equipment.

To recall back in May, US increases higher tariff of 25% (from current 7.5%) on China’s rubber medical and surgical gloves’ exports beginning 2026.

The tariffs on China medical gloves are now raised to 50% in 2025, and 100% in 2026. Refer to page 18-19 of the under medical gloves segment, “The U.S. Trade Representative has determined to increase the rate of additional duties on medical gloves to 50 percent in 2025 and to 100 percent in 2026.”

This higher tariffs were not entirely a surprise, as we’ve been taking a leap of faith and highlighted possibilities of further detrimental policies towards China’s exports. Our contrarian OVERWEIGHT rating on the Malaysian glove sector were also largely premised on such potential scenario.

This steep tariff hike modification on China gloves undoubtedly solidify Malaysian glove industry’s market leader position and allays earlier concerns on market share losses due to stiff competition.

We expect share prices of Malaysian and Singapore glove stocks to strongly react towards this newsflow._

Maintain BUY on Harta (RM2.42/TP:RM3.66); Top Glove (RM0.915/TP:RM1.45) and Kossan (RM1.83/TP:RM2.42).

Next meaningful sector event will be Top Glove’s 4QFY24 results releasing on 10th October.

Posted by Chipee > 1 week ago | Report Abuse

I'm wondering if Canada and EU will follow on this tariff hike? Canada has the highest chance. EU is still trying to buddy with China bcoz their luxury goods export. But China already slow a lot in luxury purchase.

Posted by dompeilee > 1 week ago | Report Abuse

Posted by dompeilee > 2024-01-08 08:48

I didn't manage to buy Kossan @ $1 BUT my last purchases were @ $1.2932, $1.2767 & $1.384 in June & July 2022 which more than doubled my earlier stake & lowered my average to $1.8003 & earned $322.75 in dividends to boot!🤗

After selling most of my Kossan a little too early in Jan & Mar, I SOLD 80% of my remaining stake @ $2.25 this morning.

Posted by limch > 1 week ago | Report Abuse

Harta limit up. Will Kossan follow?

Posted by crackyoo > 1 week ago | Report Abuse

Next counter to go up outside of gloves counter are their proxy, FLEXI - one of the main supplier of glove manufacturing line

Posted by Chipee > 1 week ago | Report Abuse

Hopefully foreign investors push it up higher. Good timing since foreigner investors coming into Msia market.

Posted by KimSua > 1 week ago | Report Abuse

I suspect this will not be a one day show. Will not swing too soon as the momentum is just right with feds interest rates decision on wed. The closing few hours volume continue to come in. Good luck for tmrow.

Posted by KimSua > 1 week ago | Report Abuse

Looking at EU and Canada tariffs on China ev and I am sure other industry will follow the precedent set by US administration. They always follow the big brother. Will scout around for the news.

Posted by Chipee > 1 week ago | Report Abuse

Did some research on this matter too last night. Couldn't find any ... just on EV. My suspicion is that China is experiencing deflation and tariff is necessary on China to protect markets in Europe and US. But it's long shot. US tariff is pretty good impact for now.

KimSua

Looking at EU and Canada tariffs on China ev and I am sure other industry will follow the precedent set by US administration. They always follow the big brother. Will scout around for the news.

Posted by Chipee > 1 week ago | Report Abuse

Yes, I'm observing the trend until the election. Earnings won't show up on the tariff until 2025.

KimSua

I suspect this will not be a one day show. Will not swing too soon as the momentum is just right with feds interest rates decision on wed. The closing few hours volume continue to come in. Good luck for tmrow.

Posted by KimSua > 1 week ago | Report Abuse

Ustr is a 4 Yr review cycle but one analyst mentioned 2 and down play the news. I suspect Trump to win and seal this until end 2028. China will not be able to continue to subsidize glove industry and retarget their focus. ASP will continue to rise and allow US manufacturers to start production, by then Malaysian glove industry will have a windfall in the next 4 yrs years at least. Let's see how is the profit taking today and see how foreign funds read the news.

Posted by Chipee > 1 week ago | Report Abuse

Yeah. Good analysis. Expect it to go up and down from day traders. By the 4 years end, China glove manufacturers could had been battered badly for Malaysian manufacturers to thrive even longer.

Posted by Income > 1 week ago | Report Abuse

Apa Macam? I wear glove everyday to support m is glove.

Posted by NatsukoMishima > 1 week ago | Report Abuse

Why IB never told u that China will set up factory at cheaper countries to bypass tariff ??? Try imagine what will happen to malaysia glove if they announce this step !

Posted by Income > 1 week ago | Report Abuse

Yesterday here maths +0.42 (22.95%)
Today here

Posted by Income > 1 week ago | Report Abuse

Yesterday here maths +0.42 (22.95%)
Today here -0.18 (8.00%)
Still profit 0.24 Sen
Mana rugi using maths

Posted by Chipee > 1 week ago | Report Abuse

In Harta forum is already told you US target China manufacturers even if their products come from Mexico or Indonesia. And here you are again talking BS.

NatsukoMishima

Why IB never told u that China will set up factory at cheaper countries to bypass tariff ??? Try imagine what will happen to malaysia glove if they announce this step !

Posted by tingpangeng > 1 week ago | Report Abuse

This nut modus operandi is he has unloaded his holdings then will go to every glove forum to spread negativity to create fear to push down the price so that he can load the holdings again and repeat the action

Posted by Chipee > 1 week ago | Report Abuse

The funny thing is ... he thinks every trader here is dumb to believe him.

Posted by limch > 1 week ago | Report Abuse

Not 1 day show. Gloves bulls still strong.

Posted by Chipee > 1 week ago | Report Abuse

With Kossan securing good earnings in coming years, I'm pretty sure they can reward good dividend too from the Rm2bill holdings.

Posted by KimSua > 1 week ago | Report Abuse

Kenanga finally throw in the towel! Overweight on gloves finally. 😀

Posted by Chipee > 1 week ago | Report Abuse

Yeah. 😂

Posted by FullTimeTroll > 1 week ago | Report Abuse

Nut psycho favourite thing to do is promote his highly speculative counters and talk rubbish about stocks he doesn't hold. He loves mocking others especially when they are losing money.

Posted by Endgame > 1 week ago | Report Abuse

One fund press the price down to collect more Kossan

Posted by Chipee > 1 week ago | Report Abuse

Let day traders clear their holdings. Long term investors can hold until Q125 to see the effect of the tariff.
Q3 & Q4 2024 is pretty much irrelevant.

Posted by WDCQ_I_am_legend > 1 week ago |

Post removed.Why?

Posted by Chipee > 1 week ago | Report Abuse

"Attractive Dividend policy"? Hahaha.... Hartalega only recently give dividend since their last dividend in 2022.
Kossan has been constantly giving dividend. Sell your Hartalega and buy Kossan. Kossan should be same value as Hartalega.

WDCQ_I_am_legend

https://youtu.be/tkuYRBsxxxA

Posted by ChandranG > 1 week ago | Report Abuse

Let contra players get washed out then Kossan will go up again

Posted by Michael Lee > 1 week ago | Report Abuse

Republican U.S. Senator Marco Rubio on Thursday proposed barring Chinese manufacturers from evading tariffs by setting up factories in other countries like Mexico, Vietnam or Malaysia.
Rubio accused Chinese manufacturers of shifting production to other countries that face lower U.S. tariffs, saying it allowed them "to evade tariffs and flood the U.S. market with cheap goods." A House committee raised concerns last week about a Chinese auto parts firm that may have sought to evade tariffs.

Posted by Chipee > 1 week ago | Report Abuse

Good share from Michael Lee

Posted by ChandranG > 6 days ago | Report Abuse

... Big funds are selling today as well ?

Posted by KimSua > 3 days ago | Report Abuse

Issue with India restriction on chlorinated latex glove, impacting mainly Harta.

Posted by Chipee > 3 days ago | Report Abuse

Yeah. Harta subsidiary in India mislabel their chlorinated latex glove as non-chlorinated and sold to hospitals at cheaper price. It's really about money and tax I think. Don't think shithole of a country like India cares about the environment.

https://www.medicalbuyer.co.in/hartalega-supplies-banned-chlorinated-gloves-through-mun-health-product/

Posted by Chipee > 3 days ago | Report Abuse

Ok... I read the Indian article again and finally straighten things out. Typical India talking pusing pusing. ...

Mun Health (buyer in India) imports non-medical gloves (chlorinated) and sell them to hospitals at cheaper price. Bcoz non-medical gloves are cheaper. Mun Health is undercutting other suppliers in India by cheating. Mun Health should be punished instead of banning Harta. Has nothing to do with Harta. Harta just sells what is ordered by Mun Health. Mun Health gets Harta to OEM the glove under "Glove-On Eureka" brand.

This Indian article talk about mislabelling la for the port of entry bla bla bla .... purposely declare as non-medical so no need to submit certification la just to blame Harta ... wahlau... .

Posted by hng33 > 3 days ago | Report Abuse

bought kossan at 1.85-1.86

Posted by hng33 > 3 days ago | Report Abuse

The U.S. government announced a sharp increase in tariffs on Chinese surgical gloves, raising rates to 50% for 2025 and 100% for 2026F.

The final modification imposes a much steeper tariff, which will significantly increase Chinese average selling prices (ASPs) to US$25.50/1K pcs by 2025 and US$34/1K pcs by 2026, from the current ASP of US$17/1K pcs. Given that Malaysian manufacturers' blended ASPs of US$19-21/1K pcs currently, Chinese ASPs are expected to exceed those of Malaysian producers by 21%-34% as early as next year. Hence, the reversal of the current price gap between Chinese and Malaysian gloves would enhance the competitive position of Malaysian players.


Remark: Kossan export about 45-50% of its glove to US market

Posted by hng33 > 3 days ago | Report Abuse

The impact on USD weakness is mitigated by fact that 40% of glove manufacture cost are also denominated in USD.

The remain negative impact on USD weakness can easily offset entirely by increase glove ASP which have big room of hike in 2025 by 20% from current US$19-21/1K pcs to US$25.50/1K pcs by 2025 to match Chinese glove and further 40% hike ASP potential US$34/1K pcs by 2026 match Chinese glove.

Glove profitability in USD= ASP hike + globve volume sold - (feedcost in USD)

Remark: The impact on USD weakness is NOT only affect Msia glove manufacture, but also affect Thai and China glove manufacture.

USD weakness by 12.5% in RM
USD weakness by 10.9% in Thai bath
USD weakness by 3.5% in Chinese Yuan

Therefore, all top 3 top global glove maker will collectively demand ASP hike to offset USD weakness

Posted by Chipee > 3 days ago | Report Abuse

Thx u hng33

Posted by hng33 > 2 days ago | Report Abuse

With tumbling in crude oil price now, glove maker energy cost and major raw material cost, nitrile butadiene will decrease substantially. Both energy and raw material collectively form 20% and 30% respectively, input cost in glove manufacturing. Raw material cost is denominator in USD, offer natural hedge again weak USD

Incoming US traffic 50% surcharge on competitor China glove will prompt Msia hike ASP more than offset weakness in USD. This tariff move removes the underutilization of glove makers with a very high margin. Profits are coming back

Posted by hng33 > 2 days ago | Report Abuse

Based on The Office of the United States Trade Representative (USTR) announced final modifications concerning the statutory review of the tariff actions in the Section 301 investigation of the People's Republic of China's (PRC) Acts, Aside Medical Gloves. Increase rate to 50 percent in 2025 and 100 percent in 2026.

Another glove manufacture product, facemask also impose tax increament. Face Masks. Increase rate to 25 percent in 2025 and 50 percent in 2026.

Posted by hng33 > 2 days ago | Report Abuse

added more kossan at 1.88

Posted by stevenckheng > 2 days ago | Report Abuse

dont forget banggla minimum salary gonna be 2k/month

Posted by hng33 > 2 days ago | Report Abuse

Foreign worker wage if increase, glove maker can easily adopt cost pass through as there is BIG room for ASP hike to UP begin next year to compete China glove after 50% tax hike and following year 100% tax hike for China glove

In additional, cost production will also decrease due to tumbling crude oil, a main raw material for nitrile butadiene and energy cost, offset wages increase

Posted by hng33 > 2 days ago | Report Abuse

Take note, current Malaysia glove main threat is competition from China which force Malaysia glove ,anmaufacture to halt ASP hike and decrease plant utilization rate to 35%.

Therefore, once US Tax enforce 50% on China glove in next year and 100% tax next on 2026, Malaysia glove maker will regain back glove market share in US

Posted by Chipee > 2 days ago | Report Abuse

Msia is killing our own economy. Hiking foreign pay will syphon our money into their country. And at 2K/month, this foreign workers don't pay tax although there's levies paid but paid by employers. Increasing foreign pay will not encourage employers to hire locals instead bcoz locals don't want the job to begin with.

Posted by hng33 > 2 days ago | Report Abuse

Agreed. If minimum wage pass, many EMS and semiconductor industries will suffer as they can't pass cost through due to fixed orderbook price

Construction and properties sector also suffer, increase project cost and hike properties selling price is inevitable which will result low demand

For glove manufacture, situation is bit different due to policy anti-China glove product, a massive hike of 50% tax in 2025 and 100% hike in 2026 will give huge room for Malaysia to capitalize with huge ASP hike forward and increase volume loaded and higher plant utilization.

In additional, crude oil slump resulted cheaper raw material nitrile butadiene will give higher profit margin forward

Posted by Chipee > 2 days ago | Report Abuse

Then we should see better result in Q3. Nat gas and oil prices are down. Q4 we should see more order coming from US. They might avoid China fearing their cargo may arrive in 2025.

Posted by hng33 > 2 days ago | Report Abuse

More importantly is promising outlook, both in 2025 and 2026 when major competitor suffers 50% and 100% tax levy given Msia glove maker ample room to hike ASP and increase current loss making depress 35% plant utilization rate for next 2 year forward.

Posted by dompeilee > 9 hours ago | Report Abuse

dompeilee

Posted by dompeilee > 2024-01-08 08:48

I didn't manage to buy Kossan @ $1 BUT my last purchases were @ $1.2932, $1.2767 & $1.384 in June & July 2022 which more than doubled my earlier stake & lowered my average to $1.8003 & earned $322.75 in dividends to boot!🤗

After selling most of my Kossan a little too early in Jan & Mar, I SOLD 80% of my remaining stake @ $2.25 this morning.

1 week ago

Ahhh...satisfying!!!☝ Got chance to re-average down again closer to 2025!