CIMB Research said near-term catalysts remains limited as tariff-related uncertainties and expansion of Chinese players’ overseas capacity could further weigh on the industry.
PETALING JAYA: The market remains cautious on the outlook for glovemaker Hartalega Holdings Bhd
despite efforts on cost optimisation and the gradual recovery in demand as inventories from restocking diminishes.
The company released its first quarter ended June 30, 2025 of financial year 2026 (FY26) results on Tuesday that were below market expectations due to lower demand and weaker average selling prices (ASPs).
While the company told analysts at a briefing that it expects gradual recovery in FY26, observers have largely maintained a cautious stance due to oversupply from Chinese glovemakers leading to competitive ASPs and a looming RM101mil tax issue stemming from additional assessment for the years 2017 to 2022.
CIMB Research, which maintained a “hold” rating on the stock with a lower target price (TP) of RM1.45 from RM2.30, said near-term catalysts remains limited as tariff-related uncertainties and expansion of Chinese players’ overseas capacity could further weigh on the industry.
“However, we see limited downside to the stock at current levels, with price-to-book value valuations now back to levels last seen during the glove supply glut in 2023, when industry-wide losses were prevalent,” it added.
MBSB Research has kept its “neutral” recommendation on the stock with a TP of RM1.24 from RM2.45.
The research house pointed out to the thinning profit margins due to continued pricing pressure from Chinese glovemakers in the non-US markets.
“Note that the blended ASP contracted by 5% year-on-year.
“Given the pressure on both revenue and cost, we observed that the profit margin contracted to 2.4% from 6.8% a year ago,” it said, adding that the tough operating environment has translated to downward earnings revision of more than 50% for FY26 and FY27.
Phillip Capital has also maintained a “hold” rating with a TP of RM1.34 from RM1.64, reflecting lower ASP assumptions of US$19 to US$21 per 1,000 pieces from US$20 to US$22 as well as reduced sales volume in line with the company’s latest guidance of six billion to six-and-a-half billion pieces.
Maybank Investment Bank Research has maintained a “sell” call with a TP of RM1.35 from RM1.41.
The reserach house noted that that the company would continue to focus on its core nitrile glove segment and cost optimisation efforts, including workforce redeployment together with investing RM200mil to RM300mil over the next 18 to 24 months in automation and energy-saving upgrades.
UOB Kay Hian Research expects the challenging outlook to continue pressuring sales and while the company expects US demand to recover, intensifying Chinese competition and oversupply dynamics continue to impact earnings.
It has maintained a “hold” call with a TP of RM1.40 from RM1.55.
