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Pediafx – Monday, August-28-2023 Testing the Mary Dynamics Indonesia Stock Strategy

Pediafx – PT Mark Dynamics Indonesia Tbk (MARK) is deemed to need a strategy shift in order to achieve sustainable profits amidst the decline in rubber glove demand in 2022.

In a Daily Write Up titled “Mark Dynamics Indonesia (MARK IJ/Not rated) – Shifting strategy to gain sustainability,” analyst Abyan Yuntoharjo from Mirae Sekuritas explained that established in 2002, MARK is a ceramic-based hand form manufacturer located in Medan. The company produces glove molds for surgical, examination, ceremonial, and sanitation purposes.

“MARK juga memiliki pangsa pasar sekitar 40% di seluruh dunia, dengan pelanggan dari Amerika Serikat, Tiongkok, Korea, dan negara-negara Asia lainnya. Perusahaan ini juga memiliki 3 fasilitas pabrik yang menghasilkan 2 juta cetakan setiap bulannya.”

As of Q2/2023, MARK’s revenue stood at Rp132.6 billion (+2.0% QoQ; -50.3% YoY), reaching its lowest point in the normalization phase at Rp262.6 billion (-58.2% YoY) due to normalized average selling prices (ASP) and a decrease in glove mold production. Net profit was Rp34.0 billion (+11.4% QoQ; -57.5% YoY), totaling Rp64.5 billion (-68.6% YoY) in H1/2023, with a focus on operational efficiency.

ASP increased by +2.0% QoQ with stable unit costs, improving margins. Production is scheduled to increase by the end of Q3/2023 for glove inventory. MARK targets a growing glove market with low per capita consumption, already producing 2 million units per month, and seeking lower raw material costs. The entry of South Korea among the top 10 importers of gloves for the healthcare and food sectors is a prominent trend.

After reaching its peak in 2021 due to the pandemic, rubber glove demand has declined. The expected growth of 5%-8% in 2023 depends on better ASP and health awareness.

According to Abyan, the decline in 2022 was due to excess capacity, which disrupted the supply. Growth factors include regulations and global health awareness. Challenges persist due to lower capacity utilization and normalized ASP. “The industry is shifting to a volume strategy with cost efficiency. The long-term prospects are positive as it meets the continuously growing demand for personal protective equipment.”

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