KUALA LUMPUR: RHB Research expects Top Glove Corp Bhd to register a narrower quarter-on-quarter core loss of RM40-RM45 million when it reports its financial results for the third quarter of fiscal year 2024 (3QFY24) this week.
RHB's projection marks an improvement from a core loss of RM66 million that the glove maker recorded in 2QFY24, as the research house takes into consideration improving operating efficiency and a recovery in average selling price.
However, these catalysts should be offset by the recent 5–6 per cent uptick in natural gas tariffs and the escalation of raw material prices, it said in a note today.
As such, RHB upgraded its call to "buy" from "neutral" with a higher target price of RM1.32 from 83 sen previously.
The research house learned that the industry operating dynamics have turned favourable for glove manufacturers as customers are more receptive to the average selling price (ASP) increase in the coming months.
On the other hand, it said Chinese glove makers have also raised their ASPs to US$17018 from US$15-16, according to channel checks.
In terms of demand, Malaysia's glove exports volume surged 46 per cent year-on-year (y-o-y), representing its highest-ever y-o-y growth post-pandemic, and 3.6 per cent month-on-month (m-o-m), while exports value grew 39 per cent y-o-y and 3.8 per cent m-o-m.
"This came after Malaysia recorded export volume growth of 6.0 per cent quarter-on-quarter (q-o-q) in 1Q24, indicating that the recovery momentum of global glove demand remains healthy," added RHB.