INTCO Medical's Glove Cycle Has Turned: Revenue +40.6%, Real Profit +165%

Here is an earnings headline that does not compute at first glance. INTCO Medical, the world's largest producer of non-latex disposable gloves by its own capacity count, grew first-half 2026 revenue 40.6% to RMB 6.91 billion (about US$1.03 billion). Then it reported net profit up only 17.9% to RMB 837 million. A 40% revenue jump and an 18% profit rise, in the same period, usually means a company whose selling prices are falling and whose costs are rising.

Look at the number the company puts in front of that one, and the picture flips. Adjusted net profit — earnings before one-off, non-recurring gains and losses — rose 165% to RMB 1.06 billion. Revenue and profit are moving in the same direction; the reported line is being distorted by one-off items — the kind of asset deals, fair-value moves, or one-time charges that are not part of running the glove business. The gap between the headline and the operating number is not bookkeeping trivia. It is the whole question of where this business stands in its cycle.

Who is INTCO? It is a Chinese A-share, listed in Shenzhen under 300677.SZ since July 2017 and based in Zibo, Shandong, that manufactures the flexible gloves hospitals, food plants, and factories go through by the billions — a mission-critical product sold into more than 150 countries. When COVID demand exploded, its profit rose roughly fortyfold in 2020. Then the industry's response — a wall of new capacity in China and Malaysia — produced the opposite problem: a multi-year oversupply glut in which prices collapsed and much of the industry slid into losses. The company's own net profit fell from RMB 1.47 billion in 2024 to RMB 1.01 billion in 2025 even as revenue hit a four-year high. 2025 was the floor. The first half of 2026 is the turn.

The turn is visible in the shape of the half itself. First-quarter net income was essentially zero: RMB 10 million, or EPS of 0.02 yuan against 0.55 a year earlier, on revenue that grew 16%. The second quarter then delivered essentially the entire half's profit — about RMB 827 million, by simple arithmetic on the two disclosed figures. That is what an earnings inflection looks like at a giant, automated, fixed-cost plant base: a small change in selling price feeds almost entirely to the bottom line.

The leading indicators turned before the profit did, which is how it usually works. Generic medical nitrile glove average selling prices began rising in late March 2026, ending four consecutive quarters of decline. The trigger was cost: nitrile-butadiene rubber, the main raw material, spiked with energy prices during the Gulf conflict — input costs for butadiene rose 83.1% and for acrylonitrile 51.4%, according to brokerage research — and producers began passing it through. Top Glove, Malaysia's largest producer, moved to weekly price increases; research notes say INTCO matched with its own April price hikes and began requiring cash deposits on orders. Raw-material suppliers tightened terms to sellers — up to 100% cash deposits versus 20–30% before — which is accelerating the shakeout of weaker capacity. Small producers are leaving the market: one Malaysian maker, WRP, said in April 2026 it was winding down operations, citing Middle East conflict-driven disruptions to energy and petrochemical supply chains. The same cycle appears in the peer numbers: Top Glove, Malaysia's largest producer, reported first-half fiscal 2026 sales volume up 36% and profit up 92%.

Scale is the bet that explains how fast this comes back. Capacity tells you how much of this is scale: the company took annual capacity from 103 billion pieces at the end of 2025 to 107 billion by June 30, 2026 — 74 billion nitrile and 33 billion vinyl — and it did the building through the bust rather than after it, while integrating up the supply chain into nitrile latex to blunt crude-oil swings. The "world's largest" title is real but on its own terms: Top Glove claims the crown for rubber gloves overall (about 100 billion pieces of capacity in 2022, weighted to natural latex), while INTCO leads among non-latex disposable gloves. Either way, this is the low-cost, high-scale end of the market, and it was built to sell an upcycle.

There is also a wall in the middle of the road, and it is why the market remains cautious. The United States raised Section 301 tariffs on Chinese-made medical gloves from 7.5% to 50% at the start of 2025 and to 100% at the start of 2026. The effect was brutal and fast: China's share of US disposable-glove imports collapsed from about 32% to under 3%, according to the company. INTCO is responding by adding overseas production — a "dual-region" strategy built around a base in Vietnam — but today its gloves are still overwhelmingly made in China. The upshot is that the world's largest glove maker is, for now, largely priced out of one of the industry's biggest demand markets by tariff, and its recovery rests on Europe, the rest of the world, and global selling prices rather than on US access.

So what does the stock cost after all this? Shares closed at about RMB 54 on August 28, 2026, for a market capitalization of roughly RMB 35 billion, within a 52-week range of about 33 to 68. The market has already noticed the recovery — the stock is up more than 60% off its low and the market cap is up about half over the past year. Valuation is the interesting part: on 2025's depressed profit of RMB 1.01 billion, the trailing P/E is roughly 35x, but on sell-side consensus of about RMB 3.78 per share of 2026 earnings it is closer to 14x, and about 12x on 2027 estimates. The market is paying a reasonable multiple for a recovery — not a boom.

One thing this is not, and it matters for how you use it: an income stock. The dividend is RMB 0.10 per share for 2025, a yield around 0.3% at the current price, and the retained cash is being spent on capacity because scale, not payout, is the strategy. On a dividend screen, INTCO fails, and it should — I would not confuse this with a dividend-growth holding.

What I would take from the report is a cycle, not a moat. The real signal is that glove selling prices turned, the weak capacity is leaving, and the biggest producer is converting that into record operating earnings while the reported number is held down by one-offs. The thesis is simple but unforgiving: the price upcycle has to persist, raw-material costs have to keep passing through without crushing demand, and non-US volume has to grow fast enough to outrun the tariff wall — with Vietnam capacity the clearest test of execution. The failure conditions are just as clear: prices rolled over before, from 2022 to 2024, and a repeat is possible if overcapacity returns; enough certainty on any of this would be a reason to size down rather than add.

This is a real-economy manufacturing company at the sharp end of a commodity cycle — a position for an investor who understands the gearing and can hold through the downs, not a yield shortcut. That is exactly why the gap between the headline profit growth and the adjusted figure matters: it tells you the underlying business turned before the reported number admitted it.