PETALING JAYA: BIMB Securities Research remains “neutral” on the rubber glove sector despite expecting earnings recovery to be firmly underway now.
It explained that a broad valuation re-rating remains unlikely due to persistent industry oversupply and intense competition from China.
The brokerage said the Malaysian glove industry is entering the second half of 2026 in its strongest position since the post-pandemic downturn, supported by improving utilisation rates, stabilising average selling prices (ASPs) and widening tariff differentials between the United States and China.
“While the earnings recovery is becoming increasingly visible, investors should avoid extrapolating this into another supercycle,” it said, noting that the industry is recovering from an exceptionally weak base rather than entering a new period of supply shortages.
Global glove demand is projected to rise from 421 billion pieces in 2025 to 455 billion pieces in 2026, before reaching 530 billion pieces by 2028, representing a three-year compound annual growth rate of about 8%.
The sector is also benefiting from replenishment demand after nearly two years of inventory correction, with utilisation rates among major Malaysian manufacturers climbing to 80%-90% from 60%-70% a year earlier.
BIMB Securities noted that ASPs have recovered meaningfully from trough levels, with Malaysian nitrile gloves destined for the US market currently selling in the mid-to-high US$20 per 1,000 pieces range, compared with below US$18 during the depths of the downturn.
“We expect 2H26 ASPs to remain broadly stable around US$20/1,000 pcs – sufficient to support earnings recovery, but unlikely to become a major earnings accelerator,” it said.
A key catalyst remains the widening tariff gap between Malaysia and China. With US tariffs on Chinese gloves exceeding 100%, Malaysian producers are expected to gain market share in the world’s largest premium glove market.
However, Chinese manufacturers are redirecting displaced supply to Europe and Asia, keeping pressure on prices outside the United States.
The brokerage also highlighted automation, operational efficiency and specialty products as the new competitive differentiators. It said Hartalega Holdings Bhd
stands out for its highly automated facilities, while Kossan Rubber Industries Bhd’s growing exposure to specialty and cleanroom gloves provides access to higher-margin segments.
Top Glove Corp Bhd is expected to benefit most from volume recovery, while Supermax Corp Bhd’s turnaround depends on the successful execution of its US operations. It maintained “hold” calls on Top Glove, Hartalega, Kossan and Supermax, concluding that while earnings are improving, higher multiples remain hard to justify.
