PETALING JAYA: Top Glove Corp Bhd
’s recent financial results exceeded most analysts’ expectations, mainly due to stronger-than-expected margins.
TA Research, in its note to clients, said that on a quarter-on-quarter (q-o-q) basis, higher net profit was underpinned by an adjustment in average selling prices (ASPs), which rose 17%, alongside a 1% increase in sales volume.
Coupled with cost optimisation initiatives, the glove maker’s profit before tax margin expanded by 5.4 percentage points to 9.2%, while plant utilisation decreased by three percentage points to 86%, despite higher production running capacity of 68 billion pieces.
Top Glove’s net profit more than doubled to RM81mil in the third quarter ended May 31, 2026 (3Q26), from RM34.75mil a year earlier, buoyed by higher sales, price adjustments and cost efficiencies.
Revenue increased 31.9% year-on-year to RM1.1bil in 3Q26, from RM830.25mil previously.
TA Research said that moving into 4Q26, it expects sales volumes to ease by about 8% q-o-q as customers delay purchases in anticipation of further declines in raw material costs.
Nitrile butadiene rubber latex prices, for instance, rose sharply to a peak of approximately US$1.60 per kg in May (versus US$0.70 per kg in January) and are expected to retreat by about 38% for the second half of 2026.
Consequently, it expects blended ASPs to moderate by 6% to 10% q-o-q as lower raw material costs are progressively reflected in selling prices.
TA Research has raised its financial year 2026 (FY26) net profit forecast to RM193mil (previously RM156.7mil) after revising its operating expenses lower by 2.8% and effective tax rate by 0.5 percentage points.
Its FY27–FY28 earnings forecasts remain unchanged.
In its report, RHB Research said the key question remains whether current margins are sustainable.
It noted that management is confident of maintaining circa 15% earnings before interest, taxes, depreciation, and amortisation margins for the remainder of FY26, but it sees risks of disappointment from aggressive pricing by China producers and a potential slowdown in demand.
Meanwhile, domestic gas tariffs typically reflect fuel cost adjustments with a roughly six-month lag, meaning any increase in gas costs could only become apparent from October onwards, it said.
As a result, producers currently enjoy a temporary cost advantage, but this may narrow over the coming quarters, RHB Research said, adding that combined with continued pricing pressure, it believes the industry’s ability to sustain current margin levels remains uncertain.
The brokerage raised its FY26 earnings forecast by 62% to reflect stronger-than-expected 3Q26 results.
“However, we lower FY27-FY28 earnings by 10% and 11% – incorporating lower ASPs and normalisation of cost structure, which more than offset higher utilisation assumptions,” it said.
Meanwhile, Public Investment Bank reckoned that monthly ASPs peaked in May before moderating in June as raw material conditions normalised.
Although management targets running capacity expansion to 72 billion pieces by 4QFY26, the research house expects revenue and earnings growth to moderate, limiting further pricing-led upside.
It expects higher input cost pressure from the second half of FY26 onwards, with gas tariff expected to increase circa 40% from October.
The brokerage revised its FY26 earnings forecast upward by 91.8% to factor in the higher 3Q26 revenue, but cut its FY27-FY28 forecasts by an average 15.4% as it expects the oversupply condition to persist.
At last look, Top Glove was trading at 71 sen apiece.
