Top Glove Corporation Bhd, the world’s largest glove manufacturer, has come under pressure from analysts following the release of disappointing third-quarter results for its financial year ending 31 May 2025 (Q3 FY2025), prompting several downgrades and target price revisions.
The company reported a 31% year-on-year decline in Q3 net profit to RM34.74 million, down from RM50.67 million, despite a 30% increase in revenue to RM830.25 million from RM636.87 million. Notably, Q3 profit was partially bolstered by RM29.72 million in gains from the disposal of property, plant, and equipment, indicating underlying operational weakness.
For the cumulative nine-month period (M9 FY2025), Top Glove recorded a net profit of RM70.5 million, marking a turnaround from a net loss of RM58.24 million in the same period last year. Revenue for the nine months surged 55% to RM2.6 billion compared to RM1.68 billion previously. However, this recovery has not been enough to meet analyst expectations.
CLSA downgraded the stock to “hold” and cut its target price to 70 sen from RM1.05, citing sustained pricing pressure in non-US markets. The firm flagged that core net profit for M9 FY2025 came in at RM39 million—significantly below consensus forecasts—due to weaker-than-anticipated average selling prices (ASP), despite declining input costs and a gradual uptick in demand from the US.
The research house also trimmed its earnings per share estimates for FY2025 to FY2027 by 5% to 25%, arguing that Top Glove’s earnings recovery had already been priced in, limiting further upside potential.
Top Glove’s shares closed at 71 sen, down one sen or 1.4% on the day, giving the group a market capitalisation of RM5.83 billion. The stock has declined 45% year to date.
AmInvestment Bank reiterated its “sell” recommendation and lowered its target price to 50 sen from 68 sen, describing the earnings outcome as a “big miss”. The firm cited uncertainty in US demand, particularly in Q3, as customers delayed purchases in response to unresolved tariff issues. It also noted that any benefit from US tariffs on Chinese gloves appears limited amid rising global competition.
In Europe, prospects remain subdued. While the European Union recently restricted Chinese manufacturers from public tenders exceeding €5 million, Top Glove management indicated that the impact is negligible, as most tenders fall below the threshold. Moreover, sales volume in Europe—accounting for 37% of group revenue—continued to decline in Q3 as Chinese players redirected exports away from the US market.
Analysts have raised concerns about aggressive pricing strategies by Chinese competitors in non-US markets, viewed as an attempt to mitigate the effects of US-imposed tariffs. North America currently comprises about 26% of Top Glove’s total sales.
Maybank Investment Bank maintained its “sell” call, pointing to escalating competition, particularly from Chinese manufacturers expanding capacity both within China and in ASEAN countries to serve global markets, including the US.
Top Glove, founded in 1991 by Executive Chairman Tan Sri Lim Wee Chai and his wife Tong Siew Bee, has grown into a global leader in glove production. The group operates 51 factories across Malaysia, Thailand, and Vietnam, with an annual capacity of 95 billion gloves and exports to 195 countries. Lim, 67, holds a net worth of US$1 billion (RM4.2 billion), ranking 21st on Forbes Malaysia’s 50 Richest list.
-FMT
