Thursday, 26 April 2012

CIMB Research maintains Neutral on rubber glove sector

KUALA LUMPUR (April 126): CIMB Research has maintained its Neutral rating on the rubber glove sector and said the expected implementation of a minimum wage policy by end-Apr would reduce its core EPS forecasts by 2.0-8.9% assuming a floor monthly wage of RM1,000.

In a note Thursday, CIMB Research said this was an opportunity for efficient glovemakers to gain share when smaller competitors fail.

“Our earnings estimates and target prices are unchanged as details are unknown. Key variables include the i) wage level, ii) treatment of foreign workers, iii) classification of ex-gratia payments and iv) timeline.

“We remain Neutral on the sector, with Hartalega being our top pick and Top Glove our top sell,” it said.

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