HLIB Research anticipates improved profits for Top Glove driven by rising average selling prices (ASPs) for nitrile gloves and a more consolidated industry due to tightening supply chains and increased raw material costs, particularly for nitrile butadiene rubber (NBR). While sales volume saw a temporary dip, purchasing activity is normalizing with acceptance of new pricing.
HLIB Research expects the company’s absolute profits to improve due to a larger revenue base as a result of higher ASPs. ’s business outlook has improved, supported by a recovery in average selling prices and a tightening supply chain that could accelerate industry consolidation.
Hong Leong Investment Bank Research stated that the glove maker said ASPs for generic medical nitrile gloves rose in late March after four consecutive quarters of decline. This recovery is primarily a response to skyrocketing costs for raw materials, specifically nitrile butadiene rubber . Input costs for butadiene and acrylonitrile have surged by 83.1% and 51.4%, respectively, due to the Iran war.
Top Glove’s management told HLIB Research that it has initiated weekly price hikes to pass these costs through to customers, a move mirrored by rival Chinese producers like Intco Medical.
“Management noted the largest Chinese player, Intco Medical, has implemented similar ASP increases in April to reflect higher NBR costs and is also requiring cash deposits on orders, a measure not yet adopted by Top Glove,” it noted in a report. According to Top Glove, although sales volume dipped in March as buyers adopted a “wait-and-see” approach, purchasing activity had begun normalising in April with buyers accepting the new pricing, HLIB Research stated.
Tight NBR supply and stricter supplier terms, meanwhile, have become a catalyst for much-needed industry consolidation. NBR suppliers are now requiring cash deposits of up to 100%, a sharp increase from the previous 20% to 30%.
However, despite the ASP hike, Top Glove’s management remains conservative and expects quarter-on-quarter margins to be maintained under a cost pass-through mechanism. Nevertheless, HLIB Research expects the company’s absolute profits to improve due to a larger revenue base as a result of higher ASPs. The glove maker also indicated sales volume declined month-on-month in March as buyers held back purchases due to ASP increases, but purchasing activity had begun to normalise in April.
According to the report, Top Glove’s management said if nitrile glove ASP reaches US$30 per 1,000 pieces, there could be some substitution toward latex gloves. In this scenario, it is well positioned to benefit relative to peers, given its stronger latex glove production capabilities. HLIB Research has raised its target price for the stock to 75 sen a share but maintained a “hold” rating, pending further evidence of sustained rationalisation in the sector.
It raised Top Glove’s FY26 earnings forecast by 42.8% on higher ASPs to a core net profit of RM231.1mil in FY26 ending Aug 31.
Top Glove Asps Nitrile Gloves NBR Supply Chain
United States Latest News, United States Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Glove Company Closure Results in Over 1700 Job LossesA major glove manufacturer in Sepang, WRP Asia Pacific Sdn Bhd, has ceased operations, leading to the loss of 1,426 jobs, including 304 Malaysian citizens. The closure is attributed to rising raw material costs and supply chain disruptions. Authorities are monitoring the situation to protect worker rights and ensure proper compensation.
Read more »
KESUMA monitors glove maker WRP closure as 1,426 workers laid offApril 21 (Reuters) - A small group of unauthorized users has accessed Anthropic's new Mythos AI model, Bloomberg News reported on Tuesday, citing documentation and a person familiar with the matter.
Read more »
Ping-pong robot Ace makes history by beating top-level human playersSINGAPORE: Online personality Kurt Tay was sentenced to 14 months in jail and fined S$3,000 on Wednesday (April 22) for distributing intimate material and sending threatening messages.
Read more »
Man City go top of Premier League as Burnley relegatedErling Haaland scores the only goal in a 1-0 win as Pep Guardiola’s side return to the summit for the first time since August.
Read more »
Ringgit dips near RM3.96 against greenback as US–Iran tensions cloud outlookKUALA LUMPUR, April 23 — The ringgit opened lower against the US dollar on Thursday, weighed by cautious sentiment as traders awaited clearer outcomes from ongoing United...
Read more »
Heineken Reports Volume Dip, Maintains Profit Outlook Amid Economic Concerns; CEO to Step DownHeineken announced a slight decrease in first-quarter beer sales but reaffirmed its full-year profit forecast despite a challenging global economic environment. The company also revealed that CEO Dolf van den Brink will be stepping down after six years.
Read more »