Wednesday, June 12

Hartalega Holdings Bhd Sees Surge in Stock by 10% Amid Glove Sector Rally

Hartalega Holdings Bhd witnessed a notable upswing in its stock, rising 10% to RM2.53, marking a 24 sen increase on Tuesday, December 12th. This surge in value was part of a larger rally observed in glove stocks, a response to the surge in Covid-19 cases.

Maybank Investment Bank Bhd has consequently upgraded the status of the Hartalega counter from a ‘hold’ to a ‘tactical buy’. The re-rating came with a 52-week target price of RM3.02, reflecting an improved earnings outlook.

The bank’s research note highlighted the company’s more positive stance on the future, anticipating a better performance in the second half of the financial year 2024. This optimism is grounded in expectations of enhanced cost efficiency and a heightened utilization rate following the decommissioning of its Bestari Jaya Facility.

While acknowledging Hartalega’s cautious approach towards the sector outlook, the report outlined several risk factors. These included aggressive capacity expansion by Chinese counterparts, potentially aggressive pricing strategies from Chinese counterparts owing to lower production costs, challenges in passing on increased raw material prices, and the specter of prolonged price wars and oversupply issues.

The stock currently holds six buy, seven hold, and seven sell calls, with a 52-week target price consensus of RM2.24.

Notably, Hartalega’s stock experienced a peak above RM20 in mid-2022 during the height of the healthcare pandemic before witnessing a subsequent price correction. Over the last year, its trading range has fluctuated between RM1.41 and RM2.71.

Hartalega Holdings Bhd stands as a significant player in the glove industry with a production capacity of 44 billion gloves annually, according to information available on its website.

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