Top Glove expects sales to grow due to US orders

PETALING JAYA: Top Glove Corp Bhd expects sales volume to grow 10% quarter-on-quarter (q-o-q) in the first quarter of the financial year 2026 (1Q26) driven by orders from the United States.

The sales includes order replenishment and frontloading effects and better showing from Europe due to orders visibility secured there, Kenanga Research said.

Top Glove saw new buyers in the US placing orders currently while the bigger customers are committing to larger quantities such as 20 to 50 containers. One container holds about four million pieces.

Kenanga Research is positive on the group’s prospects moving into financial year 2026 (FY26) in which it is optimistic of US sales driving double-digit sales volume growth.

Amplifying the optimism is US sales in October gaining further momentum which now accounts for 38% compared with 18% three quarters ago of group volume sales.

It kept its earnings forecasts and maintained its target price of 75 sen a share based on unchanged 1.3 times FY26 book value per share. It reiterates its “outperform’’ call.

The key risks to its recommendation include certain Chinese glove giants continuing its predatory pricing practices (for example selling below cost over an extended period of time to eliminate competitors), leading to a price war.

Lower-than-expected volume sales and further changes in tariffs which have happened before.

The group guided utilisation to be higher in 1Q26. The 4Q25 utilisation rate was 71% compared with 61% in 3Q25 (58% in 2Q25).

The group is optimistic of margin improvement in 1Q26 due to the easing of input raw material costs.

For illustration purposes, assuming a 10% volume growth and a net margin of 4.5% to 5.5%, 1Q26 core net profit could come in at between RM26mil and RM28mil (16% to 21% growth q-o-q).

Generally, raw material prices were on the decline q-o-q in 4Q25 for both average natural latex concentrate prices (down 14%) and nitrile latex prices (down 10%).

There was no specific guidance on average selling price (ASP) going forward but the group highlighted that its nitrile ASP gap had narrowed against the Chinese players by 50 US cents compared with US$3 for 1,000 pieces three years ago.

As an indication, Chinese ASP for nitrile thin-gauge glove is currently at an estimated US$15.30 versus Malaysia at US$16 per 1,000 pieces (compared with its FY26 ASP assumption of US$19 per 1,000 pieces).

However, US ASP is generally higher by US$1.00 per 1,000 pieces. Generally, the prices quoted are excluding tariffs.

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