KUALA LUMPUR (Dec 18): Analysts remain cautious on Top Glove Corp Bhd (KL:TOPGLOV) despite a stronger-than-expected start to the financial year ending Aug 31, 2026 (FY2026), citing a margin-led recovery that lacks meaningful pricing power amid persistent industry overcapacity.
Hong Leong Investment Bank noted that the recovery remains fragile as competitive pressures and unfavourable foreign exchange movements continue to cap upside.
Given the results came in broadly in line, the firm maintained its FY2026 forecast, but lowered its FY2027 forecast by 26% to reflect Top Glove’s limited pricing power in passing over forex impact to customers amid intensifying industry competition.
“We expect Top Glove to register flattish q-o-q (quarter-on-quarter) results in 2QFY2026, where favourable operating leverage and lower natural gas prices will be offset by unfavourable forex headwinds,” the research house said.
Separately, BIMB Securities said Top Glove’s 1QFY2026 results exceeded its expectations, supported by improving utilisation, cost discipline and operating leverage.
In contrast, BIMB upgraded its earnings forecasts by 92% for FY2026 and 55% for FY2027, on stronger utilisation and sustained cost savings.
It said earnings normalisation is likely to be gradual and primarily driven by efficiency gains rather than average selling price (ASP) recovery.
Top Glove returned to profitability with a core net profit of RM39 million in 1QFY2026, compared with a loss of RM18.3 million a year earlier, driven mainly by margin expansion rather than revenue growth.
Revenue was largely flat quarter-on-quarter at RM883.6 million, as lower ASPs and a stronger ringgit offset higher sales volumes.
Sales volume rose 17% year-on-year, driven by tariff-led restocking in the US, while Europe remains soft but is expected to recover from 2QFY2026. Group utilisation climbed above 70%, with plans to reopen four factories.
Both research houses maintained their 'hold' calls on Top Glove.
As of Thursday, the counter has five 'hold' calls, one 'buy' and one 'sell' from analysts, with target prices ranging from 60 sen to 75 sen.
The company shares were 3.85% higher at 67 sen at the time of writing on Thursday, valuing the group at RM5.41 billion.