The rubber glove sector is presently riding high on favourable factors, most prominently lower costs brought about by falling latex prices in addition to favourable foreign exchange trends as the US dollar strengthens against the ringgit.
These two factors should boost the earnings of glove companies if their trends persist.
Since latex price peaked during the winter season (around February to April 2012), it had fallen 13 per cent from its highs.
The research house was brought to understand that there was an ample supply of natural rubber coming from the additional plantations in neighboring countries such as Cambodia and South Vietnam.
In addition, latex traders were also expected to continue to release their stocks to unlock their cash flows, which would lead to persistent pressure on latex prices.
This was on the grounds that the glove maker had the most exposure to natural latex glove production (at 59 per cent of its cost) and a projected 15 per cent change in its earnings for every one per cent change in the foreign exchange rate.