KUALA LUMPUR: Top Glove Corp Bhd
could be poised for a meaningful share price recovery in 2024 as the glove industry's operating dynamics have turned favourable.
In a note, RHB Research said customers have been more receptive to the increase in average selling prices (ASP).
It said Chinese glove makers have also raised their ASPs to US$17-18 from US$15-16, according to channel checks.
In terms of demand, Malaysia’s glove exports volume surged 46% year-on-year (y-o-y), representing its highest-ever y-o-y growth post-pandemic, and 3.6% month-on-month (m-o-m), while exports value grew 39% y-o-y and 3.8% m-o-m.
"This came after Malaysia recorded exports volume growth of 6% quarter-on-quarter (q-o-q) in 1Q24, indicating that the recovery momentum of global glove demand remains healthy," said RHB.
RHB expects Top Glove to register a narrower quarter-on-quarter core loss of RM40-45mil as it releases its financial result for 3QFY24 tomorrow.
The research firm's projection marks an improvement from a core loss of RM66mil that the glove maker recorded in 2QFY24 as RHB takes into consideration improving operating efficiency and a recovery in average selling price.
However, these catalysts should be offset by the recent 5-6% uptick in natural gas tariff and escalation of raw material prices, it said.
RHB upgraded its call to "buy" from "neutral" with a higher target price of RM1.32 from 83 sen previously.
