CIMB Investment Bank Bhd (CIMB Securities) has maintained a NEUTRAL stance on Malaysia’s glove manufacturing sector, citing muted prospects despite some near-term recovery signals. The research house said the sector continues to face headwinds from persistent price competition, weak currency trends and a challenging cost pass-through environment.
Under its latest coverage, CIMB Securities rated Hartalega Holdings Bhd and Top Glove Corp Bhd as Hold with target prices of RM1.45 and RM0.70 respectively, while Supermax Corp Bhd was also rated Hold with a target price of RM0.53. Kossan Rubber Industries Bhd stood out with a Buy call and a target price of RM1.65, making it the preferred pick in the sector due to its diversified product portfolio and strong balance sheet.
The research house expects glove makers to post sequential quarter-on-quarter earnings improvements in the November reporting season, mainly supported by restocking activities and lower raw material costs. Prices of nitrile butadiene rubber and natural latex declined by 6% and 5% respectively in the third quarter of 2025, providing a more favourable cost environment. However, average selling prices are expected to remain largely flat as manufacturers struggle to fully pass on costs amid an oversupplied market.
The house noted that Chinese manufacturers have expanded their production bases into Vietnam, Indonesia and Cambodia since late 2024 to circumvent high import tariffs imposed by the United States. Currently, gloves imported from China face tariffs of up to 80%, which are expected to rise to 130% by 2026. This has sharply reduced China’s share of US glove imports from over 40% in 2024 to just 3% by July 2025.
Despite the shift, Malaysia continues to face strong competition from emerging players in the region. CIMB Securities highlighted that new glove plants in Southeast Asia, such as Intco’s facility in Medan, Indonesia, could further erode Malaysia’s share of the US market once operations begin in the fourth quarter of 2025. The planned capacity of the Intco plant is expected to rival Hartalega’s current output of 37 billion pieces.
The firm added that sector valuations have rebounded slightly to 0.8 times the projected CY26F price-to-book value, but remain below the three-year historical mean. It believes the absence of near-term catalysts, coupled with continued USD/MYR weakness, will keep valuations range-bound.
While the short-term recovery in glove sales offers a reprieve, CIMB Securities said the long-term outlook remains clouded by structural challenges, including oversupply and aggressive pricing. Among its coverage, Kossan remains the top pick due to its cleanroom glove exposure and focus on higher-margin segments, providing some resilience against intense competition in the generic glove space.
CIMB Securities concluded that although near-term earnings may improve, the overall industry outlook remains muted given ongoing competitive pressures and a lack of significant re-rating triggers.
