Top Glove Forecasts Turnaround in 2025
Top Glove recently reported a core net loss of MYR5.8m in 1QFY25, with Maybank IB noting that this was in line with expectations. Despite an improvement in plant utilization rate to 66%, the blended average selling price decreased by 2% quarter-on-quarter.
Looking ahead, Top Glove is optimistic about a turnaround in FY25, anticipating better sales volume and average selling prices. Maybank IB, however, is maintaining its earnings forecast and target price at MYR1.08 on a price-to-book ratio of 1.8x for CY26E, while also suggesting a sell rating due to the positives being already factored in.
Excluding certain non-operational gains, Top Glove’s core net loss for 1QFY25 was MYR5.8m, falling short of both the house’s and consensus net profit forecasts for FY25. The loss was attributed to realized forex losses and previous pricing dynamics, but there is promise of stronger earnings to come with increased order volumes from the US.
Key details from the recent results call include a 16% increase in sales volume and a 2% decline in average selling price. Top Glove expects prices to rise from March 2025 onwards as stocks with higher US tariffs deplete. The company plans to scale up production capacity and diversify into new markets like Vietnam.
Concerns remain about demand from non-US markets, accounting for 82% of 1QFY25 sales volume. Top Glove may face competition from Chinese glove makers redirecting their focus to these markets. Recovery in the US market may take time due to auditing processes, but the company has strategies in place to enhance shareholder value.
Furthermore, Top Glove is set to issue bonus warrants in early 2025, a move that will be closely monitored by investors. The path to recovery for Top Glove is not without challenges, but the company is confident and actively working towards a positive turnaround by 2025.
