Executive chairman Tan Sri Lim Wee Chai said the company is confident of putting up a strong competition with China players due to the better cost structure.
PETALING JAYA: Top Glove Corp Bhd
has returned to profitability, driven by strong sales volumes, and is in line with expectations of a better performance in the second half of financial year 2025 (2H25).
CGS International Research (CGSI Research) said the company expects 10% to 15% quarter-on-quarter (q-o-q) sales volume growth in the third quarter (3Q25) of financial year 2025 (FY25).
This will be driven largely by strong orders from both the US and European customers due to inventory re-stocking activities.
But the continued rechannelling of China-made medical gloves into non-US markets could exert further pressure on its selling prices, hence capping meaningful margin recovery for the group.
CGSI Research maintained its FY25 to FY27 earnings per share (EPS), expecting its earnings before interest and tax per 1,000 pieces to improve from a loss of US$1.22 in FY24 to a profit of US$1.10, US$1.90 and US$2.20 in FY25 to FY27, respectively.
This is still below FY15 to 19 average profit of US$2.70.
It kept its “reduce” call on the stock as it believes lingering idle capacity and continued competition in non-US markets may cap a meaningful EPS recovery.
It has a target price of 85 sen a share for the stock. At last look, the stock was at 84 sen yesterday.
CGSI Research believes the market has more than priced in a strong distant recovery for Top Glove, which is trading at 32.7 times FY26 price earnings ratio versus regional peer average of 17 times.
The upside risks cited are emergence of another health crisis leading to strong demand for gloves, including from Top Glove, and the weakening ringgit versus the US dollar lifting its earnings.
The de-rating catalysts are aggressive capacity expansion of regional players and prolonged worker supply constraints.
Top Glove recorded a core net profit of RM31.7mil in 2Q25, its first profitable quarter since 2Q22, compared to a core net loss of RM58.5mil in 2Q24.
The profit was largely driven by a 57% growth year-on-year in its sales volumes, as well as better cost pass-through ability, given the improving market dynamics.
This brought its 1H25 core net profit to RM24.6mil versus 1H24 core net loss of RM118.3mil.
Sales volume dropped 9% q-o-q to around 9.3 billion pieces in 2Q25, largely due to weakness in the European market (1Q25 was a high base).
That said, Top Glove managed to eke out q-o-q sales volume growth in the US market despite frontloading activities, driven by its pricing strategy to gain market share.
