Malaysian Glove Sector: A Kaleidoscope of Perceptions

UOB Kay Hian | 10 April 2025
The Malaysian glove sector faces a mix of investor sentiments as uncertainty builds up, but its core fundamentals remain solid. Underneath the facade of geopolitical reshuffling and the US’ reciprocal tariffs, the sector is poised for sequential earnings growth driven by a full recapturing of US market share. Moreover, the sector’s ytd retracement and bargain forward valuations are offering an attractive risk-reward balance.

Tariffs Provide Compelling Backdrop for Domestic Glovemakers

The US has imposed reciprocal tariffs at a baseline rate of 10% on all countries, with higher tariffs on countries with huge trade surpluses, including Malaysia (24% tariff).
The US also imposed a 34% tariff on all China imports, on top of the 20% already levied since February 2025, bringing the total tariffs for China imports to 104%.
This development provides a compelling thematic backdrop for the Malaysian glove sector, as the severity of current US tariffs on China medical gloves (154% in 2025, 204% in 2026) is much higher than Malaysia’s (24%).
Local glovemakers are likely to emerge as direct beneficiaries as the ASP gap further widens, effectively voiding most of China’s gloves sales into the US.
Additionally, the US imposed a 36% tariff on Thailand (10-15% US market share), which may further allow Malaysian glovemakers to recapture most of their US market share.
On a net basis, Malaysia’s market share of US medical glove imports may grow to 75-85% (from 25-30% in 2024).

Shifting Sands Between US and Europe Markets

With the US’ higher tariffs on China medical gloves (70% tariffs) currently, we see meaningful nitrile glove demand flowing back to the Malaysian manufacturers from 2Q25.
Meanwhile, shortfall from non-US sales is anticipated as competition will likely intensify after China manufacturers re-channel their sales to regions like Europe and Asia with more competitive pricing strategies following the higher US tariffs.
On a net basis, Malaysian glovemakers should see improved profitability and margin from this shift.

Bargain Valuations Offer Appealing Risk-Reward

Attributed to market risk-off following unfolding global uncertainties and valuations rightsizing from the less optimistic sector outlook, domestic glovemakers’ share prices fell 34-49% ytd.
The steep share price action reflects pessimistic sentiment despite the sector’s turnaround narrative, with valuations now trading close to -1.5SD below historical mean valuations on 2026F’s earnings.
Such valuations are in steep bargain and pose appealing mid-term risk-reward balance.

Sector Picks: Top Glove, Hartalega, and Kossan

Maintain BUY on Top Glove (TOPG MK), Hartalega (HART MK), and Kossan Rubber (KRI MK) with lower target prices.
Our target prices for Hartalega, Kossan, and Top Glove are at RM2.69, RM2.35, and RM0.97 respectively.
The glove companies under our coverage possess palatable capital upside opportunities based on 2026’s normalised earnings.
In conclusion, the Malaysian glove sector faces a mix of investor sentiments, but its core fundamentals remain solid. The sector’s turnaround narrative and bargain valuations offer an appealing risk-reward balance for investors.