Domestic glove manufacturers are projected to reach a balanced market position by early 2029, assuming a consistent annual demand growth of around 8% starting this year, according to research from CGS International (CGSI) Research. The firm reiterated a neutral stance on the sector, emphasizing that medical gloves will continue to drive demand despite caution surrounding capacity expansions, particularly by Chinese producers, which remain a significant factor shaping supply and demand dynamics in Southeast Asia.
At the recent International Rubber Glove Conference & Exhibition 2026, CGSI engaged with over 20 industry players spanning the global glove supply chain. These stakeholders reported steady recovery in demand across key end markets, with anticipated year-on-year growth ranging from 5% to 10% through 2029. Utilization rates among manufacturers have improved to between 70% and 80%, nearing the 85% to 90% level often cited as indicative of a balanced market.
CGSI characterized current trends as a gradual normalization of operating conditions following several disruptive years. While recovery varies across geographies and customer segments, overall order inflows and production remain on an upward trajectory. The research noted that company valuations now largely reflect expected earnings recovery, though profitability remains muted. The forecasted return on equity for 2028 stands at approximately 7%, significantly below pre-pandemic levels that ranged from 18% to 24%.
The research firm expressed skepticism about recent average selling price (ASP) increases announced by Chinese glove manufacturers, suggesting these are primarily precautionary responses to rising costs and unlikely to substantially boost earnings for Malaysian producers.
Among individual companies, CGSI maintained an “add” recommendation for Kossan Rubber Industries Bhd, identifying it as a top pick. The firm assigned a target price of RM1.40, citing robust demand and prospects for ASP increases that would aid cost pass-through and margin improvement. CGSI highlighted Kossan’s initiative to double cleanroom glove production capacity to 800 million gloves as a key factor, anticipating that this expansion could raise earnings before interest and tax (EBIT) margins from 10% in fiscal year 2025 to 13% by the end of 2028. Cleanroom gloves are expected to benefit from spillover demand linked to upstream artificial intelligence and data center industries.
Conversely, the research house downgraded Hartalega Holdings Bhd to a “reduce” rating from “hold” while keeping its target price steady at RM1. CGSI pointed to current valuations, which appear elevated at 14.9 times 2028 price-earnings (PE), exceeding the growth potential priced in. Although demand and utilization are expected to remain solid, margins are recovering more slowly compared to peers, with persistent risks from rising Chinese competition and constrained ASP growth. EBIT per 1,000 pieces for Hartalega is projected to rise to US$2.70 by the third quarter ending December 2029, up from US$1.70 in the third quarter of 2027, yet still trailing the pre-pandemic average of US$4.40 as market economics normalize.
Top Glove Corp Bhd was also downgraded to a “hold” from “add,” with an unchanged target price of 82 sen. CGSI regarded Top Glove’s valuation at 15 times 2028 PE as fair relative to a 2012–2019 average PE of 16.5 times. While the company shares the industry’s outlook of improving demand and utilization amid limited ASP expansion, Top Glove expressed greater confidence in managing rising Chinese competition through cost efficiency measures and preserving market share.