- Top Glove (SGX:BVA)'s 1QFY26 results were above our FY26E but in line with consensus. The improvement in earnings was due to higher sales volume, better utilisation rate and cost efficiency. It plans to reopen 4 idle factories in FY26, raising running capacity to 70b pcs p.a. from 65b pcs in FY25.
Better sales volume and operating margin
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- The earnings gap was due to higher-than-expected sales and utilisation rate of 73% (vs. ours’ 70%). EBITDA margin improved by +4.7ppt y-o-y and +1.8ppt q-o-q to 14.5%.
Resumes idle factories, raising running capacity
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- As Top Glove has secured several tenders in Europe, it expects sales volume to improve further in the coming quarters. Consequently, Top Glove intends to resume 4 idle factories (involving MYR20m capex) to raise its running capacity by +5-6b pcs to 70b pcs p.a. by end-FY26. Current lead time has increased from 30 days to 60 days while utilisation rate improves to 75%.
- Top Glove’s net gearing stood at 2% (vs. 6% at end 4QFY25).
Earnings adjustments
- Read more at SGinvestors.io.
