• When a sector starts to turn up, it's usually an interesting time to pick stocks. If Maybank KE is right, the time has come for the gloves sector which is why it has upgraded the sector to "Positive".

There are 3 key glove companies listed on SGX and a bunch more on Bursa Malaysia.

 • Meanwhile, Maybank KE would like you to consider the largest "cherries" it has identified that are looking promising in 2024.  Read what its head of research in Singapore has to say below ...


Excerpts of Maybank Kim Eng report

Cherry picking in Singapore


Analyst:  Thilan Wickramasinghe, Head of Research Singapore

Thilan Wickramasinghe11.23Thilan WickramasingheFour major themes are converging:
(1) more corporate restructurings,
(2) sustainability inflows,
(3) regional M&A and
(4) productivity boost from new technologies.

These could give Singapore earnings a further boost.

Investors may need to be more selective in 2024. We think companies linked to these themes as well as stocks that lagged from high rates and large inventories should outperform.

For themes, we like DBS, ComfortDelGro, Dyna-Mac, SingTel, and laggards CLAR (CapitaLand Ascendas Reit), CICT (CapitaLand Integrated Commercial Trust), Frencken, Genting Singapore, LREIT (Lendlease Global Commercial REIT), and Venture.

However, don’t expect a smooth ride, says Krishna Guha, who sees volatility for REITs.

For sure, cost of capital is falling, which should increase fair values, but keep an eye on operating costs.

On the other hand, Jarick Seet and Eric Ong think now is the time to raise weightings on Dyna-Mac and CD (ComfortDelGro) respectively.

By Wong Wei Sum, Property & Gloves Analyst

Question of the week: 
What are our views on Gloves sector’s outlook in 2024?

RS Glove StrippingRiverstone Holdings is a key glove manufacturer listed on SGX.

Glove makers are turning more positive on their 2024 outlook.

While 
sales volume remains volatile with a shorter order lead time as buyers 
are in no rush to lock in a contract due to excess supply in the glove market, sales volume has improved significantly QoQ.

This improvement 
could be due to rising restocking activities and lower price gap compared to their China counterparts (by USD2 3/k pcs).

We expect 
plant utilization rates to increase in the upcoming quarters, reaching >35% to 45-50% (from the current range of 35% to 40-45%),
leading to lower production costs ahead.

Raw material prices have 
started to stablize after surging in Nov 2023. Both natural latex and nitrile latex (NBR) prices are now at USD1.16/kg and USD0.77/kg, down 3% and 1% respectively, since Nov 2023.

Additionally, natural gas prices (which constitute 16-20% of total cost) has been trending down since early Nov 2023 too.

Due to a time lag, 
glove makers’ natural gas cost is expected to be higher in 1QCY24 but it should come down later, perhaps from mid 2024, following
international pricing. This will cushion the impact on bottom line and make pricing more competitive.

We tactically upgrade the sector to 
POSITIVE (a contrarian rating).

 

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Avi-Tech Electronics0.265-
Best World1.6800.050
Broadway Ind0.0950.008
China Sunsine0.4000.010
ComfortDelGro1.3600.010
Delfi Limited0.965-
Food Empire1.440-
Fortress Minerals0.280-
Geo Energy Res0.3400.010
GSS Energy0.026-0.001
Hong Leong Finance2.480-
Hongkong Land (USD)3.240-0.140
InnoTek0.445-0.005
ISDN Holdings0.315-0.005
ISOTeam0.035-
IX Biopharma0.045-
Jiutian Chemical0.025-
KSH Holdings0.250-
Leader Env0.050-0.001
Medtecs Intl0.130-0.002
Nordic Group0.3400.005
Oxley Holdings0.091-
REX International0.1340.001
Riverstone0.6850.010
Sinostar PEC0.138-0.002
Southern Alliance Mining0.600-
Straco Corp.0.500-0.030
Sunpower Group0.220-0.010
The Trendlines0.085-
Totm Technologies0.023-
Uni-Asia Group0.815-0.025
Wilmar Intl3.3300.010
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