Top Glove Corporation Bhd reported a strong improvement in earnings for the first nine months of financial year 2026 (9MFY26), with core net profit rising nearly threefold to RM150 million, driven by stronger selling prices, higher plant utilisation and improved operational efficiency.
According to a research report by Kenanga Investment Bank, Top Glove’s 9MFY26 earnings exceeded expectations, achieving 125% of Kenanga’s full-year forecast and 95% of consensus estimates.
The better-than-expected performance was mainly attributed to higher margins following a sharp increase in average selling prices (ASPs), which helped offset rising raw material costs.
For the third quarter of FY2026 (3QFY26), revenue increased 9% quarter-on-quarter (QoQ), supported by a 17% increase in ASPs and a slight 1% growth in sales volume.
Earnings before interest, taxes, depreciation and amortisation (EBITDA) jumped by more than 50% QoQ, while EBITDA margin improved to 17% from 12% in 2QFY26, as stronger selling prices and improved economies of scale from higher utilisation levels offset higher input costs.
Raw material costs increased during the quarter, with nitrile prices rising 36% and natural rubber latex prices increasing 12% amid supply disruptions linked to geopolitical tensions in the Middle East.
As a result, Top Glove’s 3QFY26 core profit rose 163% QoQ to RM81 million. No dividend was declared for the quarter.
On a year-on-year basis, 9MFY26 revenue increased 15%, mainly due to higher sales volume, which grew 34%, offsetting a 13% decline in ASPs.
The group’s EBITDA margin improved to 15% in 9MFY26 from 13% in the previous corresponding period, reflecting operational improvements and stronger pricing during the latest quarter.
However, Top Glove experienced a slight decline in utilisation rate, which eased to 86% in 3QFY26 from 89% in 2QFY26, as some customers delayed purchases following the sharp increase in glove prices.
Kenanga noted that glove ASPs are expected to moderate in the coming months as raw material prices soften and market conditions normalise.
Top Glove has guided that nitrile glove ASPs could decline from around US$25 per 1,000 pieces to between US$20 and US$23 moving into 4QFY26. Prices had already eased from a peak of US$28 in May to around US$21-US$22 by July.
The group expects low single-digit volume growth in 4QFY26 as customers adopt a more cautious approach amid price adjustments, although some buyers who delayed purchases during the price surge are expected to return.
Top Glove also highlighted that improved plant utilisation and economies of scale have helped reduce production costs by approximately 20% over the past two years, narrowing the cost gap with Chinese glove manufacturers.
Kenanga raised its FY26 and FY27 earnings forecasts by 68% and 43% respectively following the stronger-than-expected margin improvement.
However, the research house lowered its target price for Top Glove to RM0.71 from RM0.75 after rolling forward its valuation base to FY27, based on a 29 times one-year forward historical average price-to-earnings ratio (PER).
Following a roughly 40% increase in Top Glove’s share price, Kenanga downgraded its recommendation from “Outperform” to “Market Perform”.
Key risks highlighted include aggressive pricing strategies by major Chinese glove manufacturers, weaker-than-expected global glove demand, slower adoption of hygiene standards, and potential changes in tariffs affecting Malaysian glove exporters.
Share price declined to 0.71 despite a positive earnings report.
