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KUALA LUMPUR (May 8): New Paradigm Research in a note on Friday said it expects glove makers’ earnings to double in one to two quarters on glove makers' unique opportunity to raise prices above and beyond direct cost impacts.
This is supported by industry-wide price adjustments, US tariffs limiting Chinese imports, and delayed increases in gas costs for producers.
The research house is more optimistic than the market, forecasting 60%–80% higher earnings for glove makers because it believes they can raise selling prices despite higher nitrile costs. However, it also notes that prices and costs remain volatile and assumes a 5% drop in demand. While the market is cautious due to recent data showing glove prices fell in March. However, nitrile material costs have clearly increased.
New Paradigm believes most market forecasts focus on sales volume instead of price increases and have not fully included profit margin improvements. It expects that as earnings improve over the next two quarters, glove company valuations will likely rise as well.
Since the closure of the Strait of Hormuz, the nitrile prices have surged as the closure disrupted naphtha supply flows into Asia. Nitrile, which makes up roughly 40% of glove production costs, is derived from naphtha.
Malaysian glove makers source around 65% of their nitrile requirements from South Korea, which itself relies heavily on Middle Eastern naphtha imports.
New Paradigm estimates nitrile prices have risen about 60% on average since the conflict began. Still, the research house noted that the entire global glove industry, including Chinese competitors, is facing similar cost pressures, too. This allows Malaysian manufacturers to pass higher costs to customers more effectively, it added.
“Demand for medical disposable gloves is non-discretionary in nature,” New Paradigm said, adding that substitution to latex gloves is not viable because of allergy risks and the natural rubber gloves also tend to be less durable and not suitable for all applications.
The sector’s pricing power is also being strengthened by the US’ Section 301 tariffs on Chinese glove imports, which have effectively priced low-margin Chinese gloves out of the US market. Malaysian manufacturers now account for more than 60% of US glove imports by volume, while China’s market share has fallen to below 10% from over 30% previously, the house added.
“The bias for conservatism and the “wait and see” approach present an opportunity — once the earnings delivery trickles in, the upgrades to expectations could spur a more substantive rerating for valuations as well,” New Paradigm added.
It said that since the Covid-19 boom years, analysts have not significantly raised their earnings forecasts in the middle of the year.
The firm estimates that Top Glove Corp Bhd (KL:TOPGLOV) could see net profit almost double sequentially, while Hartalega Holdings Bhd (KL:HARTA) could record around 60% sequential earnings growth.
Shares of major Malaysian glove manufacturers rebounded on Friday morning, with Top Glove, Hartalega and Kossan rising between 6% and 8%. The gains coincided with the market reaction to reports of a hantavirus outbreak in South America.
CSG International Research analyst William Wo said it maintains a cautious view on the sector after noting that the World Health Organization had described the Andes strain as having a fatality rate of about 35%, although human-to-human transmission remains rare. Symptoms include fever, chills and breathing difficulties that may only appear several weeks after infection.
Based on the daily chart (1D), the technical indicators are flashing a strongly bullish signal, aligning perfectly with the fundamental story regarding ASP hikes and the Middle East disruptions.
Here is the interpretation of the indicators:
1. Price & Moving Averages (Bullish Breakout)
· Action: The stock is trading at RM 1.230, up +4.24% today. It has broken out of a tight consolidation zone.
· Signal: It has decisively moved above both the MA50 (Green line at 1.045) and is well positioned above the MA200 (Blue line). This is a classic "Golden Cross" confirmation in progress. The price staying above these major moving averages indicates the long-term trend has shifted from bearish/cautious to bullish/confirming recovery.
2. Volume (Massive Confirmation)
· Signal: There is a massive surge in volume (42.804M). This is much higher than the average volume over the previous weeks.
· Meaning: The breakout at 1.230 is legitimate. It is not a "fake-out" move. Institutional players or big funds are aggressively buying in the lead-up to the anticipated earnings boom.
3. RSI (Strong Momentum Without Overheating)
· Level: The RSI 14 is at 63.44.
· Meaning: The stock is gaining very strong momentum. An RSI reading between 50 and 70 indicates a healthy uptrend. It hasn't crossed into overbought territory (above 70) yet, meaning there is still potential for the price to run to RM 1.30 or RM 1.40 before needing a major pullback.
4. MACD (Turning Positive)
· Status: The MACD lines are sitting at 0.030 and 0.029, with the histogram barely visible.
· Meaning: Earlier, the MACD was showing a bearish/signal line crossing down. However, with today's surge, the two lines are converging for a fresh bullish crossover. If the price closes strong at 1.230, expect the MACD to turn fully green in the next session. This confirms that the momentum is shifting back in favor of the bulls.
💡 Overall Technical Conclusion
This chart confirms the "Revaluation Story" is beginning.
The market is clearly anticipating the August QR where the US$26-28 thousand ASP numbers will appear in the P&L statement.
Caution: The trend is your friend, but chasing the exact top of a large candle is risky.
Does the upcoming August QR will represent the peak where we will see a massive surge in revenue and a very significant surge in profit? , or does the higher ASP become the new normal?"
Will the market revalue Hartalega not just on this single quarter, but on their ability to sustain these US$26-28 ASPs through 2027 and beyond?
· Profits surged massively (Beat expectations): Despite revenue falling, Q4 FY26 net profit jumped 173.8% year-on-year (RM40.0m vs RM14.6m) and 26.3% quarter-on-quarter (RM40.0m vs RM31.7m).
· Dividend is BACK: This is the loudest signal of confidence to the market. The board declared a first interim dividend of 1.80 sen per share. For a stock trading around RM1.10, this yields ~1.6% per quarter (annualizing to ~6.5%)—a huge positive change from no dividends before.
· Stronger Balance Sheet: Cash position is strong (RM1.19 billion). Net Assets per share increased to RM1.30. Total borrowings are negligible.
· Operational Efficiency Improving: The report explicitly credits automation and tight cost controls for the profit jump. Higher plant utilization is expected moving forward.
The Bad (The Bear Risks)
· Revenue (Top-line) is contracting: Revenue fell 15.7% year-on-year and 2.2% quarter-on-quarter. The main culprit? Average Selling Price (ASP) dropped 21.3% in MYR terms, due to the strengthening of the Malaysian Ringgit against the USD.
· NBR (Raw Material) Costs are going UP: the theory about NBR shortages/Strait of Hormuz was correct, but it is a cost headwind, not a tailwind. The report explicitly states: "Elevated crude oil prices... exert upward pressure on key input costs, including nitrile butadiene latex." This will squeeze margins in future quarters unless ASP rises to match it.
· Huge Tax Cloud Hanging: There is a RM101 million contingent liability from the IRB (tax authorities) for additional assessments for years 2017-2021. While no provision has been made, losing this judicial review would deal a massive one-off blow to future profits.
· Profit Quality: While profit jumped, it was significantly boosted by favorable foreign exchange (RM12.3m unrealized FX gain) during the quarter. Without this, operating profit would have been lower, adding volatility to the earnings line.
The Bottom Line
The report is a "Quality Profit" surprise. Hartalega proved they can grow profits even while their ASP is dropping and raw material costs are rising. This proves strong operational resilience.
April 22, 2026
THIS REPORT HAS BEEN PREPARED BY MAYBANK INVESTMENT BANK BERHAD
Perdana Petroleum
Ready for the next offshore upcycle
Initiate coverage with BUY @ TP: MYR0.23
We initiate coverage on Perdana Petroleum with a BUY call and TP of
MYR0.23, pegged to a mid-upcycle FY27E PER of 11x, which would still be a discount to its peak of 13.3x. Our 3-year (FY25-28E) net profit CAGR of
36% is underpinned by i) a modest DCR growth of 3% annually; ii) a higher utilisation rate assumption of 63%-65% in FY27-28E; and iii) positive operating leverage in view of expectations of a multi-year upcycle in domestic capex spending from PETRONAS in 2027-2028E. Its fleet
expansion exercise and the resumption of dividend payouts are further positive re-rating catalysts. Key risks include: i) PETRONAS capex spending risks; ii) suspension or loss of PETRONAS license; iii) unexpected downtime risk; and iv) contract termination.
To ride on the upcycle in capex spending
Following a major oil price upcycle, our observation suggests that
PETRONAS tends to initiate a corresponding capex upcycle, usually with a lag of approximately one year. Moreover, the energy security theme could also see PETRONAS stepping up investments to sustain production levels and enhance resource replenishment. We are of the view that there will be a multi-year PETRONAS capex upcycle beginning 2027E. As such, the demand for OSVs should also see growth and this could propel Perdana into an earnings-growth mode amidst higher vessel utilisation.
Strong 3-year FY25-28E CNP CAGR of 36%
We forecast Perdana Petroleum’s earnings to grow at a FY25-28E 3-year core net profit (CNP) CAGR of 36%, led by a revenue CAGR of 8% and enhanced by an expansion in the group’s CNP margins to 15.7% in FY28E (from 7.9% in FY25). We expect revenue growth to be driven by: i) a modest DCR growth of 3% annually; ii) a higher utilisation rate assumption of 63% in FY27E and 65% in FY28E (from 52% in FY25); and iii) higher third- party charters due to higher vessel demand from PETRONAS and related
Petroleum Arrangement Contractors (PACs).
Now at ex-cash 4x FY27E PER
With its fleet of 14 vessels (averaging 15 years in age), Perdana Petroleum
is a clear pure-play OSV proxy to the multi-year capex spending upcycle
(which could happen in 2027-2028E). During the previous upcycle in 2023- 2024, Perdana underwent a major PER re-rating, with multiples peaking at 13.3x. As such, with expectations of a PETRONAS spending upcycle in
2027E, we deem our target PER of 11x (which is at mid-upcycle PER, but
still at a discount from peak) to be justified. Also, with a net cash of
MYR160m as at end-Dec 2025 (about 43% of current market cap), Perdana Petroleum is currently trading at about 7.5x PER on FY27E EPS (~4x ex-cash PER on FY27E EPS
No, it does not mean Hartalega has no future. It means the near-term future is very difficult, and the current high valuation is a bet on a recovery that may take years, not months.
Here is the critical distinction that separates "No Future" from "A Long, Painful Winter":
1. The "No Future" Scenario (Unlikely for Hartalega)
A company with "no future" usually has debt it cannot pay. Hartalega has Zero Borrowings (Net Cash Position) . A company with no future has obsolete technology. Hartalega is actually the industry leader in automation and efficiency.
Because of their cash pile and low cost structure, Hartalega is one of the few players guaranteed to survive a price war. Weaker Chinese or Malaysian players will run out of money and close factories first. Hartalega has the balance sheet to wait them out.
2. The Reality: A "Value Trap" Future
This is the more accurate description of where Hartalega sits today. The future likely looks like this for the next 12-24 months:
· Earnings: Will remain depressed and volatile due to Chinese dumping.
· Share Price: Will likely drift sideways or slightly down (towards the RM1.50-RM2.00 range) until there is a clear catalyst.
· Dividends: Minimal.
3. The Long-Term Future (The Bull Case for 2028+)
The "Future" for Hartalega exists, but it is dependent on an event that has not happened yet: Industry Consolidation.
Think of it like the airline industry after 9/11. Many airlines went bankrupt, but the ones with the best balance sheets (like Southwest or Ryanair) eventually came out stronger and made record profits years later.
· The Trigger: If Chinese manufacturers continue selling below cost for another 12-18 months, several will shut down.
· The Outcome: Once that excess capacity is removed, Hartalega's high-tech lines and strong cash position will allow them to re-price contracts significantly higher.
· The Timeline: This is a 2027-2028 story, not a 2026 story.
Summary Verdict
"No future" is too harsh. The company isn't going bankrupt.
"No quick profits" is accurate. If you buy at a PE of 50 today, you are buying a ticket for a recovery that is not scheduled to depart until late 2027 at the earliest. The market is pricing in a perfect recovery now, but the industry data (Chinese oversupply) says that recovery is still a long way off.
My opinion: There is a future, but the current share price is too early for that future. The "uncertainty" you mentioned is about timing, not survival.
