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3 Reasons Why the Gloves Industry Will Continue Growing

Many investors might not be aware but some of best-performing companies are those that operate in boring industries. One of these industries is the glove industry. For those who are new to the industry, some of the top stocks in the past decade have come from the gloves sector. Locally, we have listed companies like Riverstone Holdings Limited (SGX: AP4) and Top Glove (SGX: BVA). In Malaysia, there are other players like Kossan Rubber Industries Berhad (KLSE: KOSSAN) and Hartalega Holdings Berhad (KLSE: HARTA).

A quick check on Google will review that these names are some of the top performers in their respective stock markets. To cut a long story short, investing in the glove industry was one of the best things that investors could have done in the last decade.

But what about the next decade? Can the gloves industry continue to grow, which will allow the glove companies to continue their winning streak? The good news is that there’s no sign that the industry’s growth will slow down in the near future.

Increasing hygiene standards/regulations

There is an increasing awareness of maintaining high hygiene standards across the world, both in healthcare and non-healthcare industries. Moreover, regulations in most industries (especially healthcare) have become more stringent over the years, with no sign of reversing.

All the above trends mean that companies have no choice but to use more gloves in their operations in order to meet the necessary standards and regulations. Failure to do so might lead to fines, or impairment of business reputation.

Emerging markets

In the past decade, the gloves industry’s growth was mainly propelled by the demand in developed countries. Going forward, emerging markets will contribute significantly to the growth of this industry. Why so? Let’s see below:

Source: Top Glove’s Investor Presentation

From the above, we can see that the developed countries account for 20% of the world population, yet consumed 70% of global gloves in 2017. With an increase in hygiene awareness and standards, developing countries will consume more gloves over time. With developing countries accounting for 80% of the global population, the growth engine for this industry will likely continue for a long time to come.

New health threats

One other trend that have contributed towards the growth of gloves usage in the past is the spread of epidemics like SARS, bird flu, H1N1 and others. Such epidemics remain a real risk today as well as in the future.

Though we do not wish to see the outbreak of more of these epidemics in future, the reality is that such events are almost unavoidable. Thus, we can almost be certain that the usage of gloves will continue to expand, especially in times when the cases of such diseases spike.

Conclusion

The glove industry has been a growth industry for the last 10-20 years. Personally, such growth will likely continue in the foreseeable future, driven by increasing hygiene standards, emerging markets, and new health threats.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned. The Motley Fool Singapore has recommended shares of Riverstone Holdings Limited and Top Glove Corporation.