Top Glove Bhd and Supermax are the main beneficiaries of the expected fall in natural rubber latex price, says OSK Research.
In a research note today, OSK Research said it also sees Supermax as a cheaper exposure than Top Glove, since both share the closest product mix with the latter share price being three times more expensive.
"Although there is possibility of sales volume stagnating following the slowdown in the global economy, Supermax can still improve its profits by producing more higher end gloves such as dental and surgical grade gloves," it added.
OSK Research said besides producing more dental gloves, Supermax expects to ramp up its surgical glove production from 60 million pieces now to about 672 million pieces by December this year.
"We understand that there is a ready market for its product since its surgical glove is being sold five to six months forward," it added.
This surgical glove can contribute a margin of about 10-20 per cent higher compared to the basic examination glove.
"Our fair value for Supermax remains unchanged at RM5.50 and continue to like this company for its attractive valuation as well as operating in a recession resilient industry," OSK Research said. -- Bernama