KUALA LUMPUR (Sept 29): Top Glove Corporation Bhd (KL:TOPGLOV) is expected to post marginal quarter-on-quarter improvement in earnings, thanks to better volume, said Phillip Capital. 

The world’s largest natural rubber glove manufacturer is running at 74% of its capacity and the company is banking on better utilisation rates in its final financial quarter, on an increase in orders from the US, the research house said in an update on the stock. 

However, softer average selling prices and stronger ringgit against the US dollars will continue to drag on the company, Phillip Capital said. 

Net profit will likely come in at RM22 million to RM23 million for the quarter ended Aug 31, 2025 (4QFY2025), according to the house’s projections. That compares to RM21.5 million in 3QFY2025 and a net loss of RM50.5 million in 4QFY2024. 

Top Glove is expected to announce its results on Oct 9. Phillip Capital, however, is lowering its target price for Top Glove by 12 sen to 59 sen, after cutting its valuations to reflect persistent structural challenges that limit the strength of earnings recovery. 

Shares of Top Glove have lost more than half of their value this year, wiping out more than RM6 billion from the company’s market capitalisation, as glove manufacturers grapple with intense competition at a time of a massive global oversupply. 

Chinese rivals, in particular, have been setting up shop in Southeast Asia to dodge US tariffs, while providing steep discounts to compete in non-American markets. 

The recovery in average selling prices “remains constrained by aggressive pricing from Chinese players, particularly outside the US market,” Phillip Capital. Top Glove has indicated that it would not drop prices further, due to resilient demand in the US, Phillip Capital noted. 

Earnings trajectory will only improve in FY2026-FY2027, amid gradual pick-up in utilisation rates, the house added.