Credit Suisse believes the increase in PPE demand, and single-use examination gloves in particular, is structural and will remain a focus post the pandemic.
The top five Malaysian glove suppliers, which make up 70% of the market share globally, are expanding manufacturing capacity by around 15% by the end of 2020.
The broker assesses demand growth will run in excess of this increase and shift the focus to Ansell’s premium products. Still, given the company’s products are already at a premium, it is unlikely to experience a benefit as much as peers.
Outperform rating maintained. Estimates are raised by around 2% for FY20 and around 9% for FY21. Target is raised to $36.50 from $32.00.
Sector: Health Care Equipment & Services.
Target price is $36.50.Current Price is $34.28. Difference: $2.22 – (brackets indicate current price is over target). If ANN meets the Credit Suisse target it will return approximately 6% (excluding dividends, fees and charges – negative figures indicate an expected loss).
