KUALA LUMPUR (June 10): Top Glove Corporation Bhd (KL:TOPGLOV) will not be able to sustain its strong earnings beyond May, an analyst flagged on Wednesday ahead of its results release.
The world’s largest natural rubber glove maker could double its net profit in the three months ended May 2026 (3QFY2026) from the preceding quarter thanks to pre-war inventory and raw material as well as higher average selling prices, according to Maybank Investment Bank.
“However, we believe these benefits are unlikely to be sustainable” as product prices decline and energy costs rise, the research house said in its earnings preview note. “We view any post-results strength as a profit-taking opportunity.”
Maybank Investment downgraded Top Glove to ‘sell’ from ‘hold’ and noted that current valuations are already pricing in peak earnings and do not fully reflect the moderation in earnings after an exceptionally strong quarter.
Shares of Top Glove slipped on Wednesday, edging down 0.6% to 82 sen at 12 noon. The stock, however, has gained nearly 50% from this year’s lows near the end of March as the company raised prices of its gloves and there were also concerns over Hantavirus outbreaks.
The consensus is cautious as ‘hold’ and ‘sell’ outnumber ‘buy’ calls. The average target price is 71 sen, according to Bloomberg.
While average prices of gloves remain elevated compared to pre-war levels, they have started to ease in June from April and May as nitrile latex supply stabilises, suggesting that industry pricing has likely peaked, Maybank Investment said.
Costs of nitrile latex have also declined, “which we believe will prompt glove makers to gradually pass on cost savings to customers”, and there is margin compression risk for Top Glove in FY2027, the house said.
Malaysian glove makers may struggle to fully pass through higher energy costs amid industry oversupply and competition from lower-cost China glove makers that benefit from cheaper coal-based energy and higher labour productivity, Maybank Investment flagged.
Top Glove is expected to announce its results for its recently-ended quarter in June.