<figure id="attachment_2762836" aria-describedby="caption-attachment-2762836" style="width: 1600px" class="wp-caption aligncenter"><img loading="lazy" class="size-full wp-image-2762836" src="https://media.freemalaysiatoday.com/wp-content/uploads/2024/05/9957d4e5-top-glove-bernama-resize-150524.webp" alt="top glove" width="1600" height="1000" /><figcaption id="caption-attachment-2762836" class="wp-caption-text">New Chinese glove factories in Indonesia and Vietnam pose a growing threat to Malaysia’s export share in the US market. (Bernama pic)</figcaption></figure>
PETALING JAYA: The impending commissioning of Chinese glove manufacturing facilities in neighbouring Asean countries will further cloud the outlook of Malaysia’s top glovemakers.
RHB Research said new facilities being commissioned in Indonesia and Vietnam poses a growing threat to Malaysia’s export share in the US market.
These facilities could produce up to 10 billion pieces annually, accounting for about 6% of the top five Malaysian glovemakers&#8217; combined capacity, the research house said.
“Channel checks suggest that new capacity by Chinese manufacturers in Indonesia will begin operations in October 2025,” it said in a note today.
It noted that factory visits have likely already commenced, and large buyers typically require about four months of post-visit validation before placing major orders. In the best case, it may take five to eight months before shipments begin, it added.
“We expect average selling prices (ASPs) for generic gloves produced at these new plants to be US$1-2 (per 1,000 pieces) cheaper than the US$18-19 currently offered by Malaysian manufacturers,” it said.
Chinese glove companies are setting up factories in some Asean countries primarily to avoid high US tariffs, lower production costs, and diversify their supply chains. This strategy, sometimes called “China plus one”, aims to mitigate risks associated with relying solely on manufacturing in China.
RHB said Malaysia&#8217;s glove exports rebounded 64% month-on-month in July after four consecutive months of decline and rose 6% year-on-year.
“However, the majority of the export volume increase was directed to non-US markets. The US now accounts for 45% of Malaysia&#8217;s glove exports, down from 75% in June.
“Competition outside the US remains far more intense due to aggressive pricing by Chinese manufacturers, who continue to undercut regional peers,” it added.
RHB also maintained its “sell” calls for Malaysia&#8217;s two largest glove manufacturers – Top Glove Corp Bhd and Hartalega Holdings Bhd.
It slashed its target price for Top Glove by 17% to 54 sen from 65 sen previously while also cutting Hartalega’s TP by 5% to RM1.08 from RM1.14 previously.
It said the “sell” calls were premised on persistent challenges in cost pass-through, rising operating costs, and the weakening of the US dollar against the ringgit.
Top Glove shares fell 1.5 sen or 2.5% to 58 sen, giving the group a market capitalisation of RM4.85 billion. Hartelega closed 2 sen or 1.6% lower at RM1.20, valuing it at RM4.11 billion.

MatchPoint Times

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