Latest news with #HartalegaHoldingsBhd
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.
Free Malaysia Today
06-05-2025
- Business
- Free Malaysia Today
Hartalega expects Malaysian glove makers to gain US market share
Malaysia's share of the US glove market surged to around 60% in early 2025 from about 46% in 2024, according to Citigroup Inc. KUALA LUMPUR : Despite the threat of high US tariffs, glove maker Hartalega Holdings Bhd said Malaysian makers of the latex products are primed to gain further American market share as Chinese competitors face geopolitical headwinds. 'Escalating tensions between the US and China are creating an opening for Malaysian glove makers to gain ground in America,' Hartalega said in its earnings statement today. 'The fallout 'is likely to provide positive catalyst' for the country's glove makers, such as Hartalega,' the company said. Malaysia is negotiating with the US to bring its tariffs on the Southeast Asian nation down to zero, from the 24% that president Donald Trump pledged to impose. Chinese exporters to the US are grappling with Trump tariffs of 145%. Malaysia's share of the US glove market surged to around 60% in early 2025 from about 46% in 2024, according to a late April report from Citigroup Inc. China's US glove market share dropped to around 5% from 21% in the same period. 'Chinese companies had made 'significant inroads' in the US medical exam gloves market as a result of the pandemic,' it said. Nonetheless, the US market 'will be challenging in the short to medium-term' due to tariffs and competition that will put pressure on prices, particularly amid softer demand in the US during the first half of 2025 following 'earlier front-loading activities,' Hartalega said. 'Global demand has recovered beyond pre-pandemic levels in 2024, and the group anticipates continued healthy growth over the longer term,' the company said. Hartalega's fourth-quarter net income dipped 2.8% to RM14.5 million (US$3.4 million), weighed down by higher operating expenses, according to today's filing. The company said it will 'continue driving automation and digital transformation initiatives to enhance productivity and cost efficiency across all facilities'.
New Straits Times
06-05-2025
- Business
- New Straits Times
Hartalega FY25 net profit surges nearly six-fold to RM75mil
KUALA LUMPUR: Hartalega Holdings Bhd's net profit for the financial year ended March 31, 2025 (FY25) surged nearly six-fold to RM74.54 million from RM12.50 million a year earlier, driven by stronger sales volume. Revenue rose 40.76 per cent to RM2.59 billion, compared with RM1.84 billion a year earlier. "The significant increase of RM747 million or 41 per cent in revenue was mainly driven by a 40 per cent increase in sales volume," it said in a statement. For the fourth quarter (Q4) ended March 31, 2025, Hartalega recorded a net profit of RM14.48 million, slightly lower than the RM14.9 million posted a year earlier. Revenue for the quarter rose 15.3 per cent year-on-year to RM611.55 million, from RM530.34 million in the same quarter last year. Higher sales volume and stronger selling prices lifted revenue, but net profit was dragged down by increased non-operating expenses during the quarter. Hartalega chief executive officer Kuan Mun Leong said the group's full-year performance reflects encouraging signs of recovery for the sector. Nevertheless, he cautioned that the operating environment remains volatile, with the global rubber glove market still facing oversupply and ongoing pricing pressure. "In addition, US demand is expected to remain moderated in the near term following the earlier front-loading activities as well as the ongoing trade uncertainties. "However, despite the impact of escalating US-China trade tensions on the global trade landscape, this could also serve as a catalyst for Malaysian manufacturers to regain export market share in the US," he said. On the sector outlook, Kuan said the rubber glove industry's prospects remain positive. He said global demand has surpassed pre-pandemic levels and is expected to grow further, driven by rising healthcare needs, greater hygiene awareness and broader usage across medical and non-medical sectors.
