Shares of Malaysian glove manufacturers rebounded on Monday, with Top Glove Corporation Bhd (KL:TOPGLOV) leading gains, as higher average selling prices (ASPs) initiated by Chinese producers lifted sentiment across the sector.
An analyst who declined to be named told The Edge the rally was driven by rising ASPs after Chinese manufacturers increased prices due to higher oil costs. Malaysian glove makers followed suit, raising prices to likely between US$27 and US$29, compared with US$23–24 for their Chinese peers.
However, the analyst cautioned that higher ASPs may not significantly boost earnings, as the increases largely reflect rising input costs rather than improved margins. The sector outlook remains neutral, weighed down by ongoing oversupply and intense competition from Chinese players.
Among the gainers, Top Glove rose 10.53% to 63 sen, just below its intraday high of 64 sen, with 93.8 million shares traded, making it the second most active counter. Hartalega Holdings Bhd (KL:HARTA) climbed 13% to RM1.13 after hitting an intraday high of RM1.20, with 51.9 million shares traded.
Supermax Corp Bhd (KL:SUPERMX) gained 13.21% to 30 sen after touching an intraday high of 32.5 sen, while Kossan Rubber Industries Bhd (KL:KOSSAN) rose 5.83% to RM1.09 after reaching RM1.14 earlier in the day.
Separately, another analyst who also spoke on condition of anonymity noted that supply constraints — particularly for nitrile — are beginning to tighten, although demand has remained stable. China’s INTCO Medical is understood to have sufficient supply but is holding back exports amid the current global conditions.
Domestically, manufacturers that can shift production towards natural latex gloves may be better positioned in the near term, although this may not be sustainable across the industry. The analyst maintained a ‘buy’ call on Top Glove, citing its ability to pass on costs and ramp up latex output by 80%-90% within a month if needed.
While some players may see margin improvements, the analyst warned that a potential drop in nitrile prices to US$26 by end-May could alter the outlook.
According to Bloomberg data, 20 research houses cover Top Glove, with seven ‘buy’, 10 ‘hold’, and three ‘sell’ ratings. The 12-month average target price stands at 65 sen.
The uptick also comes in the wake of the Malaysian Rubber Glove Manufacturers Association’s (Margma) recent appeal for government support, citing mounting pressure on manufacturers due to a shortage of key raw materials linked to ongoing geopolitical tensions in the Middle East.
The industry group said disruptions to global shipping routes — including those caused by the blockade of the Strait of Hormuz — have constrained the supply of nitrile butadiene rubber (NBR), a key input derived from petroleum, while also driving up costs.
The association described the situation as a “crisis”, warning that prolonged disruptions could affect Malaysia’s ability to meet global demand for medical gloves and strain the sector’s financial position.
Source: theedgemalaysia