As the epidemic has brought people’s awareness of safety protection and changes in living habits, some unfamiliar industries are gradually entering the eyes of the public, especially investors. The disposable protective glove industry is one of them, once in the capital market. The heat is high.
In the context of globalization and normalization of epidemic prevention and control, the surge in time-sensitive demand and the future conventional demand precipitated by it are bringing profound changes to the global disposable glove industry. What changes is the disposable glove industry going through? How much will global consumption be in the future? Where is the future investment direction of the disposable glove industry in the medical sector?
Much more than before the outbreak
In 2020, the domestic disposable glove industry staged a myth of a surge in performance during the epidemic, and many domestic disposable glove suppliers made a lot of money. This high degree of prosperity continued until this year. Data show that in the first quarter of 2021, among the 380 A-share pharmaceutical and medical device companies, a total of 11 profitables exceeded 1 billion yuan. Among them, Intech Medical, the leader in the disposable glove industry, is even more outstanding, achieving a net profit of 3.736 billion yuan, a year-on-year increase of 2791.66%.
After the outbreak of the new crown pneumonia epidemic, the global demand for disposable gloves has surged. According to data from the General Administration of Customs of China, the export volume of disposable gloves in 2020 will increase from 10.1 billion per month in the first two months before the epidemic to 46.2 billion per month (November of the same year), an increase of approximately 3.6 times.
This year, as the global epidemic continues and mutated strains appear, the number of infections has soared from 100 million at the beginning of the year to 200 million in just over 6 months. According to statistics from the World Health Organization, as of August 6, 2021, the cumulative number of confirmed cases of new coronary pneumonia in the world has exceeded the 200 million mark, which is equivalent to 1 in 39 people in the world infected with new coronary pneumonia, and the actual proportion may be higher. Mutant strains such as Delta, which are highly infectious, are coming more aggressively and have spread to 135 countries and regions in a short period of time.
In the context of the normalization of epidemic prevention and control, the promulgation of relevant public policies has increased the demand for disposable gloves. The National Health and Family Planning Commission of China issued the "Technical Guidelines for the Prevention and Control of Novel Coronavirus Infection in Medical Institutions (First Edition)" in January this year, requiring medical personnel to wear disposable gloves when necessary; the Ministry of Commerce issued an epidemic prevention and control Technical guidelines: People working in shopping malls, supermarkets or agricultural products markets should wear masks and gloves when delivering items to customers...
Relevant data shows that with the gradual change of the public's awareness of health protection and living habits, the demand for daily disposable gloves is also increasing. The global disposable glove market demand is expected to reach 1,285.1 billion by 2025, with a compound annual growth rate of 15.9% from 2019 to 2025, far exceeding the compound growth rate of 8.2% from 2015 to 2019 in the years before the outbreak.
Due to the high living standards and income levels of the population in developed countries, and strict public health regulations, in 2018, taking the United States as an example, the per capita consumption of disposable gloves in the country has reached 250 pieces/person/year; at that time, China once The per capita consumption of sex gloves is 6 pieces/person/year. In 2020, due to the impact of the epidemic, the consumption of disposable gloves in the world will increase sharply. With reference to forward-looking industry research data, the per capita consumption of disposable gloves in the United States is 300 pairs/person/year, and the per capita consumption of disposable gloves in China is 9 pairs/person. /Year.
Industry insiders pointed out that with the booming economy, population growth and growing awareness of health protection, developing countries are expected to see progressive growth in glove consumption in the short to medium term. In other words, the global demand for disposable gloves is far from reaching the ceiling, and there is still huge room for growth in the future.
Glove production capacity
Transfer from Southeast Asia to China
The reporter combed through the public data and found that from the perspective of industry distribution, the world's outstanding disposable glove suppliers are concentrated in Malaysia and China, such as Top Gloves, Intech Medical, He Tejia, High Yield Qipin, Blue Sail Medical, etc.
In the past, the main manufacturers of latex gloves and nitrile gloves were concentrated in Malaysia, and the suppliers of PVC (polyvinyl chloride) gloves were basically in China. In recent years, as my country's petrochemical industry chain has matured, the production capacity of nitrile gloves has shown a gradual shift from Southeast Asia to China. According to industry insiders, the construction of an advanced disposable glove production line is difficult and has a long cycle. Generally speaking, the construction period of disposable PVC gloves takes about 9 months. For the disposable nitrile glove production line with a higher technical threshold, the investment in a single production line will exceed 20 million yuan, and the first-phase production cycle is as long as 12 to 18 months. A large-scale production base must invest at least 10 production workshops, each with 8-10 production lines. It will take more than 2 to 3 years for the entire base to be completed and put into operation. Taking into account the cost of the PVC production line, the total investment needs at least 1.7 billion to 2.1 billion yuan. RMB.
Under the influence of the epidemic, it is more difficult for Southeast Asian suppliers to ensure the continuous and stable production of disposable gloves on their production lines. The short- and medium-term production capacity decline is inevitable, and the global market demand gap further expands. Therefore, industry insiders believe that China's disposable nitrile gloves will fill this supply gap, and the profitability of domestic nitrile gloves suppliers will be supported for a period of time.
From the perspective of domestic disposable glove manufacturers, the momentum of capacity upgrades in the past two years has continued to rise. Judging from the current upgrade situation, among the leading domestic disposable glove track companies, Intech Medical is the manufacturer with a relatively large investment in the global industry. The company has three glove production bases in Zibo, Qingzhou and Huaibei nationwide. A few days ago, in response to questions about whether the production capacity of Intech Healthcare is growing too fast, Liu Fangyi, the chairman of the company, once said that “high-quality production capacity will not be excessive.” From the current point of view, with the stable launch of production capacity, Intech Medical has the opportunity to seize market share in the future. The Southwest Securities Research Report shows that by the second quarter of 2022, the annual production capacity of Intech Medical disposable gloves will reach 120 billion, which is about 2.3 times the current annual production capacity. The "real money" generated during the epidemic has become the company's financial basis to ensure the smooth implementation of the capacity upgrade project.
It is worth noting that, according to Ingram Medical’s 2020 annual report, the company’s net cash flow from operating activities was 8.590 billion yuan, while monetary funds were as high as 5.009 billion yuan; in the quarterly report of this year, the company’s net cash flow from operating activities was 3.075 billion yuan. Yuan, a year-on-year increase of 10 times, during the reporting period, monetary funds were as high as 7.086 billion yuan, an increase of 8.6 times over the same period last year.
The key to profit
Look at cost control ability
Cost control ability is one of the main factors that determine the future profitability of disposable glove companies. Industry insiders pointed out that in the cost composition of the disposable glove industry, the first two items that account for the largest proportion are the cost of raw materials and the cost of energy.
Public data shows that among the companies currently investing in glove factories in the industry, only Ingram Medical and Blue Sail Medical have a cogeneration investment plan. Due to the extremely strict investment threshold and energy review of thermal power plants, in 2020, Intech Medical announced that it will invest in the combined heat and power projects in Huaining and Linxiang. The planned annual production capacity of 80 billion nitrile butyronitrile will be the cost control of the industry. The most capable capacity. Ingram Medical once stated on the investor interaction platform that in terms of cost control, Ingram Medical has reached the world's best level in the industry.
In addition, Ingram Medical issued an announcement in April this year that the company achieved operating income of 6.734 billion yuan in the first quarter of 2021, an increase of 770.86% year-on-year, and a net profit of 3.736 billion yuan, which is better than the top two glove giants in Malaysia and Hetejia. Expand global market share.
It is understood that Intco Medical serves about 10,000 customers in more than 120 countries and regions around the world; the company's own brands "Intco" and "Basic" have successfully established themselves in five continent markets. At present, the annual production capacity of Incorporated disposable protective gloves is close to 10% of the global annual consumption. On this basis, the company's projects in terms of production capacity upgrade and cost control have been launched and progressed smoothly.
Industry insiders believe that compared with Malaysia, China's disposable glove industry has systemic advantages in raw materials, energy, land and other aspects. In the future, the trend of industry transfer to China is obvious. Domestic manufacturers are facing major upgrade opportunities, and the competitive landscape will also change. At the same time, the industry insiders also pointed out that the next five years will be a critical period for China's disposable glove production capacity to accelerate its export to the sea and fill domestic demand. After the continuous explosion of the performance of leading companies in the industry, the domestic disposable glove industry is expected to shift gears and enter a long-term and stable "growth curve."