Latest news with #HartalegaHoldingsBhd
New Straits Times
06-07-2025
- Business
- New Straits Times
Malaysia glove demand to rebound in 2H25
KUALA LUMPUR: Malaysia's glove sector demand is expected to rebound in the second half of 2025 (2H25) due to current low inventory levels, said Kenanga Research. The firm said that following slower inventory movement in 1H25 due to the front-loading effects of US customers purchasing from Chinese makers, this could spark a sudden surge in orders. It believes the current concern of Chinese glove makers further lowering average selling prices (ASPs) is overplayed, since the current ASPs of US$15 to US$17 per 1,000 pieces are higher than the previous down-cycle ASP of US$13 per 1,000 pieces. "Anecdotal evidence suggests that despite the impact of tariff-related disruptions, there is only so long customers can hold off making purchases. "If past history is any guide, based on previous down-cycles, Malaysian glove makers' stock prices will start to re-rate once the ASP concerns subside, and demand starts flowing back to Malaysian glove makers," it said. Meanwhile, Kenanga Research said the EU decision and US tariff on Chinese glove makers could benefit Malaysian glove makers. The firm said the potential increase in demand would be an added boost for local glove players on top of expected expansion in the US rubber-glove market. Assuming both EU and US orders flow back to Malaysian glove makers gradually in 2H25, the firm said Malaysia could see an aggregate of 70 billion pieces – 35 billion from the EU and 35 billion from the US. Overall, Kenanga Research has maintained an "Overweight" rating on the sector. It said Malaysian glove stocks are trading at deep value levels, pricing them close to the worst of the down-cycle. "The glove sector under our coverage is currently trading at negative two standard deviations below its historical one-year forward average. "While earnings may remain weak in the near term, structural demand and supply rationalisation offer long-term upside. "We prefer selective exposure to quality names like Hartalega Holdings Bhd and Kossan Rubber Industries Bhd," it added.
The Star
19-06-2025
- Business
- The Star
Glove sector hit by soft demand and higher costs
BIMB Securities Research cautioned that the second half of 2025 will likely see flat sales volumes and stagnant average selling prices. PETALING JAYA: The outlook for Malaysia's rubber gloves sector is not looking very positive at the moment, according to BIMB Securities Research. In a report, it cautioned that the second half of 2025 (2H25) will likely see flat sales volumes and stagnant average selling prices (ASPs). 'ASPs are expected to show minimal improvement, remaining flat amid global oversupply and persistent price undercutting by Chinese glove manufacturers in non-US markets,' the research house said. Adding to the pressure, Chinese companies are relocating parts of their production to South-East Asia – Indonesia, Vietnam and Cambodia – to circumvent tariffs while maintaining cost competitiveness. Given this competitive landscape and weak US demand momentum, the research house said meaningful price recovery appears unlikely. After frontloading activities by US customers in January and February, BIMB Securities Research said order volumes have since slowed amid inventory buildup. 'Looking ahead to 2H25, we anticipate only a small increase in demand as customers remain cautious amid ongoing tariff uncertainties,' the research house said. It said minimum wage hikes have raised labour costs, and despite easing natural gas prices, profitability remains fragile. With that, the research house has maintained its 'neutral' call on the sector, citing structural issues and global trade uncertainties, with limited upside catalysts. 'We have a 'hold' on Hartalega Holdings Bhd , Kossan Rubber Industries Bhd and Top Glove Corp Bhd and 'non-rated' for Supermax Corp Bhd ,' it added.
The Star
13-05-2025
- Business
- The Star
Stiff competition to affect Hartalega's prospects
RHB Research noted signs of order book recovery, with May orders rising to 2.3 billion piece. PETALING JAYA: Despite a strong earnings rebound for its financial year ended March 31, 2025 (FY25), Hartalega Holdings Bhd 's prospects remain clouded by intense competition and a prolonged industry recovery, say analysts. While the glove maker's fundamentals have improved, research houses warned that structural oversupply, volatile foreign exchange trends and geopolitical factors could temper further upside in the near term. TA Research noted that Hartalega's FY25 results – which saw net profit surge to RM74.54mil from RM12.5mil in FY24 – were encouraging, but earnings momentum may flatten in the coming quarters. 'We reduce our FY26-FY27 earnings projections to RM68.5mil and RM107.4mil (previously: RM140.2mil and RM191.3mil), respectively, after lowering the sales volumes by 8% and 10.9% and incorporating FY25 numbers into our model,' the brokerage said. It added that sales volumes were expected to remain flat in the first quarter of FY26 (1Q26), with utilisation rates hovering between 60% and 70%, while average selling prices (ASP) could fall by around 5% quarter-on-quarter (q-o-q) due to lower raw material costs. RHB Research highlighted Hartalega's current valuation as attractive, trading below historical means. 'Hartalega is currently trading at 1.65 times 2025 price-to-book-value (P/BV), which is below its three-year historical mean of 1.8 times,' it said. RHB Research noted signs of order book recovery, with May orders rising to 2.3 billion pieces, and guided volume for 1Q26 expected to reach up to 6.5 billion pieces – indicating a 6% q-o-q growth. Still, RHB Research trimmed its target price to RM2.83 from RM3.30, factoring in foreign exchange adjustments and concerns over 'the higher risk associated with easing trade tensions between China and the United States'. The research house maintained its 'buy' call on Hartalega. Hong Leong Investment Bank (HLIB) Research said: 'Hartalega shared a cautious outlook, indicating that the industry's supply-demand equilibrium could be delayed from the previously projected 2026 timeline.' However, HLIB Research acknowledged that the United States' 145% tariff on Chinese vinyl gloves could eventually benefit Malaysian nitrile glove makers by shifting demand as nitrile gloves become more price-competitive.
New Straits Times
12-05-2025
- Business
- New Straits Times
Hartalega downgraded amid sector uncertainty despite earnings surge
KUALA LUMPUR: Hartalega Holdings Bhd has been downgraded to a "hold" rating from "buy" as analysts grow cautious over the company's near-term prospects amid increasing uncertainty in the global glove industry. Hong Leong Investment Bank Bhd (HLIB Research) has lowered its target price for Hartalega to RM2.16 per share, citing increased uncertainty over the industry's supply-demand equilibrium as it heads into 2026. The new target price is based on a more conservative price-to-earnings (P/E) multiple of 26 times, down from 32 times, applied to the glovemaker's unchanged calendar year 2026 earnings per share (EPS) forecast of 8.3 sen. The revised valuation comes despite Hartalega's stronger-than-expected earnings in the fourth quarter ended March 31, 2025, which came in at 192 per cent of HLIB Research's full-year forecast. Hartalega's core profit after tax and minority interests (PATMI) for the fourth quarter of financial year 2025 (4QFY25) came in at RM11.4 million, representing a significant year-on-year increase of 8.9 times, despite a 54.6 per cent decline compared to the previous quarter. This brought the group's full-year FY25 core PATMI to RM68.6 million—a 4.4-fold jump from the previous financial year—driven by higher-than-anticipated revenue supported by more favourable average selling prices (ASP). "Despite the upbeat results, we maintain our FY26–27 forecasts as we expect the performance in the first quarter of financial year 2026 (1QFY26) to be weighed down by the ringgit's 4.3 per cent appreciation against the US dollar since late April 2025," it said in a note. On a positive note, HLIB Research said the current 145 per cent US tariff on China imports could encourage a gradual demand shift away from vinyl gloves to nitrile rubber gloves, mainly from Malaysian manufacturers, by US buyers. This, it said, could help to absorb the additional rubber glove capacity coming from Chinese players. China dominates the US vinyl glove market with a 70-75 per cent share and has been selling for US$9-10 per 1,000 pieces. However, the imposition of the tariff would drastically inflate the price of Chinese vinyl gloves to US$22-24.5 per 1,000 pieces, which is more expensive than generic nitrile rubber gloves at US$15-16 per 1,000 pieces. "While both vinyl and nitrile gloves are Type 1 allergy-free, nitrile gloves offer superior elasticity and provide a better barrier against contamination. "Moreover, the steep US reciprocal tariffs on Vietnam at 46 per cent and Indonesia at 32 per cent, presently on a 90-day pause, could discourage Chinese glove makers from expanding there," HLIB Research added. RHB Research, meanwhile, said that its late-March sector upgrade has largely materialised, with stocks under its coverage posting gains of 7 to 15 per cent. The firm has maintained a BUY on Hartalega with a revised target price of RM2.83 (from RM3.30), offering 33 per cent upside potential. It noted that Hartalega is currently trading at 1.65 times its 2025 price-to-book value (P/BV), which is 0.3 standard deviations below its three-year historical mean of 1.8 times. The research firm views this valuation as attractive, especially in light of the anticipated earnings recovery in 1QFY26 following the completion of the inventory adjustment cycle. "The management guided that the May orderbook had picked up to 2.3 billion pieces from an average monthly orderbook of 2 to 2.1 billion pieces, with 1QFY26 guided volume to be within the range of 6 to 6.5 billion pieces, indicating a 6 per cent QoQ growth at the higher end of guidance.
New Straits Times
08-05-2025
- Business
- New Straits Times
Hartalega's US market momentum at risk if tariffs on Chinese glove makers are eased
KUALA LUMPUR: The bullish outlook for Hartalega Holdings Bhd in gaining further market share in the US could come under pressure if existing tariffs on Chinese glovemakers are eased, said Kenanga Research. The research house noted that Hartalega, which has a high US sales volume that accounts for between 50 per cent and 60 per cent of sales, would have had the most to gain. "Even so, we believe that in terms of price per book value (PBV) valuation, its share price is trading at a level commensurate with pre-tariff imposition. "Before the US tariffs imposition on China glove glovemakers in the September calendar year 2024 (CY24), Hartalega was trading at between 1.8 times to 2.0 times PBV. Assuming 2 times FY26 book value per share, the stock should trade at RM2.50," it said in a note. Hartalega pleasantly registered a profitable fourth quarter (Q4) FY25 against a guidance of loss or breakeven during the Q3 FY25 results briefing. The FY25 results were within Kenaga Research's expectation but missed consensus by 12 per cent. "We consider Q4 FY25 results to be above the company's past guidance of a loss or breakeven from the Q3 FY25 analyst briefing," it said. Looking into Q1 FY26, Kenanga Research said Hartalega guided sales volumes to rise between one per cent and eight per cent quarter on quarter (QoQ) but expects a marginally lower average selling price (ASP). Looking into 1H FY26, the firm noted that the company expects strong orders recovery due to inventory replenishment. "We cut our FY26 net profit by 26 per cent on forex as we prudently assume, for now, a cost pass-through to customers would be challenging. "We lowered Hartalega's target price to RM3.20 from RM4.00 previously and reiterated the Outperform call on the stock," it added.
