KUALA LUMPUR: The glove industry is showing its clearest signs of recovery since the pandemic, supported by improving demand, rising utilisation rates and stabilising prices that point to a long-awaited turnaround.
Rakuten Trade research head Kenny Yee said demand from the United States (US) is strengthening while excess capacity continues to ease, helping the sector regain stability after several challenging years.
"Financial year 2026 (FY26) is likely to mark the start of a more sustained recovery, supported by improving margins and better earnings visibility.
"Malaysian manufacturers remain competitively positioned through tighter cost control, enhanced environmental, social and governance (ESG) practices and resilient global healthcare demand," he said in a statement.
TOP GLOVE LEADS THE PACK
The improving sector dynamics have begun to reflect in corporate earnings, with Top Glove Corp Bhd emerging as the first major player to show a meaningful rebound.
The group posted a net profit of RM38.6 million for the fourth quarter ended Aug 31, 2025 (4Q25), reversing a net loss of RM6.6 million a year earlier. This lifted its full-year earnings to RM109.1 million, compared with a RM64.9 million loss in FY24.
Rakuten attributed the turnaround to rising orders from the US and the early stabilisation of average selling prices.
Top Glove's exports to the US now account for 38 per cent of total sales, up from 18 per cent just three quarters earlier.
The group also received an upgrade to an AA ESG rating by Morgan Stanley Capital International, reflecting improvements in governance, labour practices and sustainability.
Rakuten said other major players, Hartalega Holdings Bhd and Kossan Rubber Industries Bhd are also showing gradual improvements, helped by higher utilisation rates and normalised inventory levels across the industry.
Top Glove is the largest glove company on Bursa Malaysia by market capitalisation, followed by Hartalega, Kossan and Supermax Corp Bhd.
Collectively known as the "Big Four", these companies enjoyed unprecedented profits during the pandemic in 2020 but later faced a severe downturn as oversupply and intense competition set in.
MIXED BUT IMPROVING RESULTS
The latest earnings show an industry still in transition, with recovery emerging at different speeds across players.
Hartalega's net profit rose 112 per cent to RM18.3 million in the second quarter ended Sept 30, 2025, compared with RM8.63 million a year ago.
For the first half, however, net profit fell 24 per cent to RM30.91 million from RM40.55 million previously, reflecting lingering margin pressures.
Kossan reported a relatively stable performance, posting a flat net profit of RM31.15 million for the second quarter ended June 30, 2025, versus RM31.34 million a year earlier.
For the cumulative six months, net profit improved 6.2 per cent to RM66.81 million.
Supermax continued to narrow its losses, reducing its net deficit to RM67.04 million for the fourth quarter ended June 30, 2025, from RM128.52 million a year ago.
For the full year, its net loss improved to RM160.40 million from RM175.62 million in 2024.
SHARE PRICES STILL SOFT
Despite operational improvements, glove counters have remained under heavy selling pressure year-to-date.
Top Glove's share price has declined 54.81 per cent since Jan 2, falling from RM1.35 to 61 sen as at Nov 17.
Hartalega dropped 73.3 per cent over the same period, from RM3.97 to RM1.06, Kossan fell 58.63 per cent to RM1.15, while Supermax slid 68.46 per cent to 41 sen.
Looking ahead, Rakuten maintained its positive stance on the sector's leading names, noting that both sales volume and average selling prices are gradually improving.
Rakuten Trade chief executive officer Kazumasa Mise said the sector's recovery underscores Malaysia's resilience in export-driven manufacturing and presents renewed opportunities for investors.
"As fundamentals gradually improve, investors may reassess exposure to leading sector names supported by stronger demand visibility and more disciplined industry dynamics," he said.
While potential price competition and tariff adjustments pose short-term risks, Rakuten sees the medium-term outlook strengthening as the industry enters a consolidation phase.
Lower input costs, with natural latex down 14 per cent and nitrile latex 10 per cent quarter-on-quarter, are expected to further support profitability in the coming quarters.