MARC Ratings has affirmed its ratings on TG Treasury Berhad’s RM3.0 billion Islamic Medium-Term Notes (IMTN)/ Perpetual Sukuk Programmes at AA-IS(cg)/AIS(cg). The outlook on all ratings is stable.
The sukuk programmes carry an irrevocable and unconditional guarantee from TG Treasury’s parent company Top Glove Corporation Bhd (Top Glove); therefore, the senior-ranked IMTN rating reflects the corporate credit rating of the parent company. Top Glove’s market position as a major global glove manufacturer, its well-established operating track record, and strong liquidity profile remain key rating drivers. However, the corporate credit rating is moderated by industry susceptibility to pricing competition, particularly between Malaysian and Chinese manufacturers which could reverse margin recovery seen in the recent periods.
The two-notch rating differential between the senior rating and the Perpetual Sukuk rating reflects the latter’s subordinated position relative to Top Glove’s senior unsecured obligations, in line with MARC Ratings’ methodology.
MARC Ratings notes that Top Glove has so far managed to maintain its margin improvement trajectory amid slow recovery in glove selling prices in view of lower feedstock cost. The comparatively higher import tariffs imposed by the US on Chinese products have benefitted domestic glove manufacturers such as Top Glove. Operating profit before interest, tax, depreciation, and amortisation (OPBITDA) of RM127.6 million and cash balances of RM712.8 million as at end-1QFY2026 provide strong capacity to meet operational requirements and financial obligations.
In 1QFY2026, Top Glove’s revenue remained largely flat as higher sales volumes — supported by sales diversion following the increase in US tariffs on Chinese-manufactured medical gloves to 70% (FY2025: 50%) — were offset by the weakening of the US dollar against the Malaysian ringgit and lower average selling prices (ASPs) which aligned with lower raw material prices. Operating margins, nevertheless, improved to 5.8% (1QFY2025: 2.0%), mainly supported by higher utilisation of 73% (1QFY2025: 66%) and continued cost management initiatives.
Capital expenditure over the next three years is expected to be largely funded through internal funds and remain focused on maintenance and selective capacity reactivation. The planned reactivation of four idle plants is aimed at raising running capacity to about 70 billion pieces per annum, while investments in nitrile butadiene rubber (NBR) latex and existing gamma facilities are to reduce reliance on third-party suppliers. The group retains the flexibility to reassess its capex plans to be in line with prevailing market demand and operating conditions.
Top Glove’s consolidated borrowings stood at RM823.8 million as at end-1QFY2026, translating into a low gross debt-to-equity (DE) and net DE ratios of 0.17x and 0.02x, placing the group at a near net-cash position. In the absence of significant expansionary capex, borrowings are expected to remain broadly stable over the near to medium term.