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Strong recovery in demand for top glove, with a 40% upward revision in net profit for the 2025 fiscal year.

The outlook for future glove demand may exceed expectations, according to Kenanga Investment Bank. $TOPGLOV (7113.MY)$
The future performance is more optimistic, with a significant increase of 39% and 42% in net profit forecasts for the fiscal years 2025 and 2026 (ending at the end of August).
Following recent meetings with senior management of top glove, analysts at Kenanga Investment Bank are optimistic about the company's performance outlook.
"There are signs that top glove will experience a stronger demand rebound than expected after entering the 2025 fiscal year."
He added that top glove's sales continued to rise month by month in September this year, with the company also expecting customers' inventory replenishment activities to strengthen in the coming quarters.
"Currently, top glove's sales volume is increasing by 25% to 30% per month, aiming to improve overall capacity utilization to 65% to 70%. We originally predicted that the company's capacity utilization for the fiscal year 2025 would only be 55%."
In addition, the analyst pointed out that top glove's export volume to the USA continues to improve, now accounting for 28% to 30% of its global sales.
"Top glove believes this is due to stocking activities by US customers, coupled with more Chinese glove manufacturers being listed by the country's Food and Drug Administration (FDA) as a watchlist, while the capacity utilization of Chinese peers has also reached 90%, almost at full production capacity."
Regarding the average price of gloves, the analyst stated that top glove is optimistic about price trends, predicting that the average price will gradually rise next, with an increase of 5% to 15%, or an increase of 80 cents to 1.50 US dollars per thousand gloves.
"Nevertheless, due to lag effects, glove prices will only start to rise in November to December this year."
The analyst estimated that the price wars of some overseas industry players will disappear next, and he conservatively predicts that the average glove price will be 20 US dollars per thousand gloves.
However, the analyst still maintains the "market tracking" rating for top glove, and the stock's target price has been raised from the previous 97 cents to 1.02 ringgit.
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