With this, the total export volume of rubber products shrank 19% y-o-y in May.
The team writes: “April's export volume represented just 61% of the pre-pandemic two-year average. Meanwhile, export value was at MYR1.04 billion ($315.7 million), down 4% m-o-m.”
The persisting weakness in glove exports, they note, could be an indication of still-elevated channel inventory in May, which points to second quarter results remaining challenging.
“We expect cost pass-through to remain challenging in 2Q2025 as the decline in raw material costs outpaced the US dollar’s depreciation against the Malaysian ringgit, making customers less willing to accept price hikes,” writes the team.
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With this, the RHB analysts believe that the narrowing average selling price (ASP) gap in the sector especially after the US-China trade truce could mean US customers may now consider alternative suppliers.
Other industry headwinds include the escalating cost environment as well as more intense competition from China manufacturers, with new plants set to commence operations by the fourth quarter.
Despite this, they see Riverstone Holdings as a bright spot in the industry, due to the company being well-positioned to weather industry headwinds.
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This is due to Riverstone’s “differentiated exposure” within the healthcare specialty gloves industry, which commands better profit than generic gloves, as well as the recovery of global semiconductor sales, which the team notes should drive earnings growth for its cleanroom segment.
With this, the analysts have kept their “buy” call on Riverstone Holdings at an unchanged target price (TP) of 95 cents.
As at 11.45 am, shares in Riverstone Holdings are trading 0.5 cents higher or 0.75% up at 67.5 cents.
