Employees attach latex gloves to an air compressor as other gloves are inflated in the air-leak test room at a Top Glove Corp. factory in Setia Alam, Selangor, Malaysia, Photographer: Charles Pertwee/Bloomberg
PETALING JAYA: Glove manufacturers may experience near-term stability in both pricing and volumes in the first half of financial year 2026 (1H26), supported by startup issues at a major Chinese maker’s Indonesian plant and weather-related disruptions in Thailand.
Maybank Investment Bank Research (Maybank IB) said while it does not expect a major re-rating in 1H26, the sector appears to be moving into a “more balanced phase where downside risks are better understood and already largely reflected in valuations”.
“We upgrade Top Glove Corp Bhd
to ‘hold’ (from ‘sell’) and maintain ‘hold’ calls on Kossan Rubber Industries Bhd and Hartalega Holdings Bhd, while upgrading the sector to tactical ‘neutral’ (from ‘negative’).”
The research house said while pressure from China makers remains, recent start-up operational issues at a major China glove producer with its new Indonesia lines could temporarily slow competitive supply growth over the next one to two quarters.
“We understand that while the company initially planned to run 20 lines, only half of them are currently operational due to these startup challenges.
“In addition, based on our channel checks, the China glove maker is not aggressively cutting prices and is selling at US$16 to US$17 per 1,000 gloves likely due to higher startup costs and production that has yet to achieve economies of scale, in our view.”
Furthermore, for context, Malaysian glove makers are selling at US$17 to US$19 per 1,000 pieces.
As for the situation in Thailand, floods in Hat Yai have severely disrupted Sri Trang Gloves’ (STGT) production as 43% of its production lines are located in Hat Yai and contributing around 29% of its total production capacity.
“We understand that STGT has temporarily suspended production at the site and this could potentially divert some orders to Malaysia temporarily, we believe.”
In the third quarter of financial year 2025, 30% to 40% of STGT’s revenue was derived from Asia, followed by about 20% each from the United States, Europe and Latin America.
However, the research house said the strengthening ringgit would weigh on exporters, particularly glove makers with largely US dollar-denominated revenue.
Lower raw material costs and active hedging should cushion the impact on margins.
While structural challenges persist, near-term supply disruptions among regional competitors offer relief to Malaysian players and their share prices should stabilise over the next three – to – six months, added Maybank IB.
It noted that Top Glove plans to reopen three idle factories in the financial year 2026 (FY26), raising running capacity to 70 to 71 billion pieces per year, from 64 billion pieces in FY25.
“The resumption of these facilities reflects management’s confidence in medium-term demand recovery and should help improve cost efficiencies as utilisation normalises.
“The group’s utilisation rate is around 75% and management expects utilisation to improve further, supported by steady orders, particularly from its US customers.”
