WHILE investors can toy with the idea that the Delta variant – the more contagious COVID-19 variant as well as all its sister variants (eg Alpha, Beta and Gamma) – may provide short-term relieve to glove makers from a demand perspective, the health crisis is also wreaking havoc on the industry operationally.
This has prompted the Malaysia Rubber Glove Manufacturers Association (MARGMA) to question the Government’s decision of instructing all medical glove manufacturers in Selangor to cease production under the enhanced movement control order (EMCO) despite the product being an important personal protective equipment (PPE) item and should fall under the essential category.
According to MARGMA, Selangor hosts the largest congregation of medical rubber glove manufacturers and combined – producing about 58% of all medical examination and sterilised surgical gloves to the world – while Malaysia as a whole produces about 67% of total glove consumption globally.
To fight its case, MARGMA shared the big concern of the shutdown by major French healthcare and medical glove distributor Euromedis SA’s Mathieu Roturier:
“Malaysia must perform its obligations to the world to ensure adequate supply of medical gloves to the hospitals. This sudden closure is sending a bad signal that Malaysia is not capable to fulfill its global supply as a leading medical glove producer, it is about responsibility also.”
While the plea by MARGMA is comprehensible, the glove industry is also confronted by labour abuse elements which have made global headlines – in particular with the US Customs and Border Protection – not to mention improper housing and adherence to standard operating procedures (SOPs)/social distancing, thus making glove manufacturing plants a breeding ground for COVID-19 infection.
In fact, the Selangor State police is currently probing Top Glove Corp Bhd for transferring 1,606 employees from their Westlite hostel to eight hotels prior to a targeted EMCO at the dormitory.
Selangor State Police Chief Datuk Arjunaidi Mohamed disclosed that police are invoking Article 270 of the Criminal Code (which covers the offence of malignantly taking an action that is likely to spread the infection of any disease dangerous to life) to investigate the allegations. The offence is punishable with a jail term of up to two years or fine or both.
That vaccination is actively conducted globally, hence expediting the projection of achieving herd immunity – not to mention intensifying competition from new players – has also hurt the average selling price (ASP) of gloves with prospects of a steady decline in the medium to long term.
Coupled with poor ESG (environment, social and governance) rating, it is no wonder that the share prices of the Big-Four glove makers as well as their smaller listed peers have languished towards their 52-week low while research houses have begun to downgrade their calls on prominent glove stocks from “buy” to “neutral” or “’sell”. – July 12, 2021
