KUALA LUMPUR (March 12): Top Glove Corp Bhd’s (KL:TOPGLOV) earnings for the second quarter ended Feb 28, 2026 (2QFY2026) are expected to remain largely flat sequentially, as improving demand and higher utilisation rates are offset by softer glove prices and a stronger ringgit, according to Phillip Research.
In a note on Thursday, the research house said it expects the world’s largest glove maker to post quarterly earnings of about RM35 million, broadly unchanged from the preceding quarter.
This comes as operational improvements including higher plant utilisation and rising shipment volumes are likely to be offset by slightly lower average selling prices (ASPs) and the impact of the ringgit strengthening against the US dollar.
Sales volumes are projected to increase about 3% quarter-on-quarter to 11.6 billion pieces, supported by stronger shipments to Europe following a recently secured tender, while demand from the US is expected to remain largely flat.
Phillip Research noted that the group’s utilisation rate is expected to rise to about 75%, up from 73% in the previous quarter, as global glove demand gradually improves. Lead times have also lengthened to 45-60 days from 30-40 days previously, indicating firmer order momentum.
Looking ahead, Top Glove plans to reactivate four factories by the end of FY2026, which would increase operational capacity to about 70 billion gloves annually from 65 billion currently. The pace of the reactivation will depend on the sustainability of incoming orders, the research house said.
Meanwhile, the company may gradually raise glove prices as nitrile latex costs increase. Nitrile glove ASPs currently range between US$17 and US$18 per 1,000 pieces in the US and US$15-US$16 in Europe.
However, competition remains intense as Chinese manufacturers ramp up production capacity, including new plants in Indonesia offering lower prices to boost utilisation, though management believes the impact is manageable given Top Glove’s scale and cost advantages.
Phillip Research maintained its "hold" recommendation on the stock but lowered its 12-month target price to 54 sen from 60 sen after revising its valuation multiple lower.
“The lower valuation reflects persistent structural challenges and global overcapacity, which are expected to continue weighing on both sales volume and margins,” the research house said.
Despite near-term pressures, the research firm expects earnings to gradually recover over FY2026 to FY2028 as utilisation improves and global glove demand continues to normalise.