Kenanga Investment Bank Bhd (Kenanga Research) has raised the 2026 net profit forecast for Hartalega Holdings Bhd by 12%, along with the upward revision of the company's target price from RM3.20 to RM3.25, citing strong demand recovery.
Meanwhile, the 2025 forecast remains as analysts factor in appreciating ringgit and higher utilisation rate for the year.
As reported, Hartalega, which has been into glove manufacturing over three-and-a-half decades, has seen more enquiries from its international customers from the US, leading to strong demand recovery into 2026 that exceeds market expectation. In 2025, a lower margin is expected due to the strengthening of the US dollar-to-ringgit foreign exchange (forex) rate, though the effect of ringgit's appreciation is partially offset by a higher utilisation rate.
Analysts believe that the increase in overseas sales volume will also offset the impact from the stronger ringgit.
The group revealed that the growth momentum will sustain as customers continue to replenish their depleting glove stockpile, thus lifting the utilisation rate, which was 78% in 1QFY2024/251, or mid-year 2024, to 88% and 95% in FY2024/252 and FY2025/263, respectively. The estimated rates of utilisation are against analysts' assumption of 78% and 90% for the stated financial years.
The recently announced US import tariffs, including a 100% imposition of taxes on rubber medical and surgical gloves from the Mainland, will take effect in 2025 and 2026.
Meanwhile, average selling prices (ASP) are expected to inch up gradually, potentially by US$1.00 to US$2.00 per 1,000 pieces to US$22 to
US$23 per 1000 pieces.
Kenanga Research has awarded an OUTPERFORM call and has revised upward the target price for Hartalega to RM3.25 from RM3.20.
As at 11:42am Oct 10, Hartalega's stock price traded at RM2.90. (Stock updates from Bursa Malaysia)
- 1QFY2024/25 = The first quarter of the financial year to end 31 March 2025, comprising the months of April, May, June of year 2024. ︎
- FY2024/25 = Financial year to end 31 March 2025 (from 1 April 2024 to 31 March 2025) ︎
- FY2025/26 = Financial year to end 31 March 2026 (from 1 April 2025 to 31 March 2026) ︎
