Malaysian glove makers eye short-term stability amid supply disruptions
KUALA LUMPUR: Malaysian glove manufacturers could experience short-term stability, benefiting from temporary relief amid regional supply disruptions.
Maybank Investment Bank (Maybank IB) noted that temporary supply disruptions in Thailand and operational challenges at a major Chinese competitor could support near-term price and volume stability for local makers."
Its analyst Wong Wei Sum said the sector will enter a more balanced phase in the first half of 2026, with downside risks largely priced in.
The bank has turned "Neutral" on the sector, up from "Negative".
"While we do not expect a major re-rating, Malaysia glove makers may see near-term stability in pricing and volumes, helped by start-up issues at a major China maker's Indonesia plant and weather-related disruptions in Thailand," she said in a note.
Wong said only half of the Chinese company's planned 20 lines are currently operational, limiting supply growth in the near term.
She added that the China glove maker is not aggressively cutting prices and is selling at US$16-17 per 1,000 pieces, likely due to higher start-up costs and production that has yet to achieve economies of scale.
Floods in Hat Yai, Thailand, have also disrupted production at Sri Trang Gloves' facility, affecting 43 per cent of its lines, which could temporarily divert orders to Malaysian producers.
Despite a stronger Malaysian ringgit potentially weighing on exporters with US dollar-denominated revenue, lower raw material costs and active hedging are expected to cushion margins.
Wong expects sales volumes at 70–75 per cent utilisation rates and average selling prices to remain stable over the next three to six months, supporting share price stabilisation despite ongoing structural challenges.
Maybank IB upgraded Top Glove Corp Bhd to "Hold" as the share price has retreated and is now Fairly priced.
It maintained "Hold" ratings on Kossan Rubber Industries Bhd and Hartalega Holdings Bhd with target prices of RM1.19 and RM1.27, respectively.
Wong said the company expects further improvement in its utilisation rate, supported by steady orders, particularly from the US, where Top Glove's market share has increased to 35 per cent from 26 per cent in FY25.
She said the reopening of Top Glove's idle factories, adding 16 production lines, reflects the company's confidence in medium-term demand recovery and should improve cost efficiencies.
"Top Glove intends to raise its capacity to 70–71 billion pieces per annum in FY26 by reopening three idle factories, adding 16 production lines.
"It is targeting 20–30 per cent sales volume growth in FY26 and expects pre-pandemic margin recovery by FY27," she added.
Wong said the glove maker's upcoming first-quarter results could be stronger than the previous quarter, supported by a higher utilisation and lower nitrile latex prices, partially cushioning the impact of a stronger ringgit.
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