Top Glove reported 4QFY25 core net profit of RM25m (3QFY25: RM2.3m core losses) and higher revenue of RM889.6m (+7% q-o-q). For FY25, the core net profit of RM24m was above our expectations (RM7m) but below the consensus (RM59m).
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Operating parameters are mixed in 4QFY25.
4QFY25 volume sales strengthened 18% q-o-q, reflecting strong recovery of demand from US customers as earlier overstocked inventories depleted. Input costs were also much lower as key raw material costs declined meaningfully (nitrile butadiene -10% q-o-q; latex concentrate cost -14% q-o-q). These offset ASP contraction (-5% q-o-q) to around US$18/’000 pcs due to intensifying competition from China competitors, besides softening MYR/US$ rates (-3.5% q-o-q).
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Management guides a potential 20-30% volume sales improvement in FY26, back to pre-COVID-19 levels…
Management estimates that FY26 demand will see strong improvement as US distributors’ overstocked inventories are depleted. This may bring Top Glove’s FY26 volume sales to 48- 52b pieces (FY25: 40b pieces), and utilisation rate to 73-79% (FY25: 63%).
Top Glove's FY26’s earnings growth will be supported by:
higher US sales mix (4QFY25: 42%) with stabilising ASP,
falling raw material costs and natural gas tariffs, and
margin expansion on better efficiency and utilisation rate.
…but profitability margin takes time to recover.
Read more at SGinvestors.io.
Above is an excerpt from a report by UOB Kay Hian Research. Clients of UOB Kay Hian may be the first to access the full PDF report @ https://www.utrade.com.sg/.
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