Petaling Jaya: Top Glove Corporation Bhd expects a strong recovery in 2025 due to rising demand and redirection of orders after the United States imposed new tariffs on China-made gloves.
The company, which is the world’s largest glove maker, also expects its performance in the coming quarters to be driven by key factors such as global glove stock replenishment, improvement in pricing power due to increased demand and increased supply constraints from the shortage of foreign Will be inspired. Wages in Malaysia.
“There was a higher influx of orders from US customers following the new 50% tariff on glove imports from China, which came into effect on January 1, 2025, with a further increase to 100% by January 2026. We’ll see the full impact of this tariff in 2025, Top Glove reports Sunbiz Through a statement.
While it is set to benefit from the redirection of US orders from China, Top Glove expects no new expansion by Chinese companies due to US tariff issues. “Due to uncertainty over potential US actions, expansion outside China by China-based manufacturers is also expected to be minimal/modest,” it said.
Top Glove targets 60% growth in sales volume for fiscal year 2025 and expects improved profit margins from higher efficiency and utilization rates.
On January 1, 2025, the US imposed a 50% tariff on rubber medical and surgical gloves imported from China. This tariff is set to increase to 100% by January 2026.
Despite potential fluctuations in raw material prices and exchange rates, Top Glove is confident that strong demand for gloves, combined with supply constraints, will allow it to pass costs on to consumers.
“We expect the glove industry to continue to improve and the group to deliver increasingly strong performance in the coming quarters,” Top Glove said.
Phillip Capital Sdn Bhd equity research analyst Aiman Kamil Ahmad Shoukhi said the outlook for the rubber gloves sector remains positive this year.
He said the industry has faced challenges post the COVID-19 pandemic, primarily due to an oversupply situation leading to reduced sales volumes and reduced average selling price (ASP).
“During the period of oversupply, local glove manufacturers struggled to raise ASPs due to low customer acceptance, and Chinese glove manufacturers, which use coal as a primary energy source, sold their products at significantly lower prices. Sold on – resulting in loss of market share for the locals. Producer.
“However, as reserves have been exhausted and some stocks have been exhausted, local manufacturers now have room to recover,” Ayman Kamil said.
He said the main focus in 2025 will be on the extent of earnings improvement among glove manufacturers, sales volume trends, opportunities for higher ASPs and timelines for recommending potential.
“Investors should closely monitor developments in the US-China trade tensions as they have significant implications for the glove sector, especially as the US is revising its tariff policy on rubber medical and surgical gloves.”
Regarding earnings, Aiman Kamil said both Hartalega Holdings Bhd and Kosan Rubber Industries Bhd have seen consistent operating improvement and earnings growth in recent quarters due to better sales volumes and higher ASPs. “However, Hartalega reported a loss in the latest quarter due to start-up costs related to the recommendation of its new line.”
Aiman Kamil said utilization levels among local manufacturers increased to 75-90% in the second half of 2024, reflecting growing customer demand.
Phillip Capital Channel’s investigation shows that the pace of recovery remains positive, with ASP stable at US$19-22 (RM85.63-99.15) per thousand pieces, rising to more than US$18 in 2023, and sales Volume is expected to increase by 5-10%. The current quarter is supported by replenishment and redirected orders from Chinese manufacturers to Malaysian players.
“Local manufacturers may consider raising ASPs by 3-5% quarter-on-quarter, targeting US$22-24 per thousand pieces in 2025.”
Phillip Capital maintains an overweight stance on the sector, favoring companies with strong balance sheets and significant US sales exposure to take advantage of the ongoing recovery.
“Hartlega has about 60% US exposure, followed by Kosan at 45% and Top Glove at 17%.”
Aiman Kamil said the region’s outlook remains positive, driven by sustained earnings growth and favorable dynamics arising from US-China trade tensions.
“Malaysian manufacturers are expected to gain larger global market share, potentially increasing their share to 50% (up from 35-45%) due to order diversion and growing demand.”
Malaysian Rubber Glove Manufacturers Association president On Kim Hung said Sunbiz Malaysia should see demand for rubber gloves revive as some members are already expecting order shipments from their US customers to accelerate by the end of next month.
“In 2023 to mid-2024, our industry was challenged by global overstocking of gloves and the collapse of ASPs. Due to heavy competition from the region, especially China, Malaysian manufacturers struggled but still managed to perform fairly.
On said the oversupply situation is easing and ASP has seen improvement.
“Additionally, the US tariffs on China that have come into effect from January this year should have some impact on global trade as well as our export trade. “The market direction to 2025 will continue to be dictated by global geopolitical tensions, particularly in the Middle East, as well as developments around US economic policies under the Trump administration,” he said.
