Kenanga Research said the group guided that 3Q26 volume growth will be higher than in 2Q26.
PETALING JAYA: With the glove sector still facing headwinds, Hartalega Holdings Bhd
is sharpening its focus on operational efficiency to stay competitive.
In its post-second quarter ended Sept 30, 2025 (2Q26) briefing with analysts, the glovemaker said it is targeting a smaller workforce to below 5,800 employees from the 6,000 and higher automation levels.
In 2Q26, cost optimisation initiatives resulted in a 112% year-on-year rise in net profit to RM18.3mil despite revenue falling by 17% to RM539.66mil.
This brought 1H26 net profit to RM31mil, which was down by close to a quarter.
Several research houses said the results missed their expectations and below Bloomberg consensus estimates.
Bloomberg data showed that 13 research firms maintained a “hold” call on Hartalega, while five had a “sell” rating and three issued “buy” calls.
The cautious stance mirrorred Hartalega’s share price performance, which had fallen about 70% year-to-date to RM1.17 per share.
At 33 times financial year 2027 (FY27) price-to-earnings, CGS International Research said the stock’s valuation appeared expensive, given its estimated return on equity of 2.8%.
Other takeaways from its analysts’ briefing is that Hartalega sees volume outlook improving.
According to Kenanga Research, the group guided that 3Q26 volume growth will be higher than in 2Q26.
It also guided that the United States glove inventory is dropping to low levels with frontloaded stocks depleting and it is currently seeing order replenishment from some of its customers.
The United States accounts for 60% to 70% of the group’s sales volume, according to the research house.
It has guided monthly recovery of two billion to 2.3 billion pieces in 3Q26.
Hartalega said given the current geopolitical tensions between the United States and China, and implications for trade restrictions and tariffs, buyers are less likely to source for supplies only from China to diversify buying sources and may opt to purchase from other countries, including Malaysia.
In terms of demand, the group highlighted that global demand has surpassed pre-pandemic levels averaging 350 billion pieces per year presently versus 300 billion pieces before.
However, analysts noted that Hartalega guided for average selling prices (ASPs) in 3Q26 to remain challenging, expecting them to be flat quarter-on-quarter or slightly lower, in the range of US$20 to US$21 per 1,000 pieces versus its FY26 forecast assumption of US$21.
This compares with an average of US$22 per 1,000 pieces in the first half of FY26, reflecting the impact of continued intense competition in the market.
Hartalega planned to raise its ASPs slightly to pass on some of the higher costs but might not do so fully if the ringgit continues to appreciate against the US dollar.
“Hartalega is also differentiating itself in the glove market by expanding into specialty glove production, which offers higher margins and reduces exposure to commodity price swings,” said Kenanga Research.
To strengthen its operational readiness, the group plans to upgrade plant three and four, each with an annual capacity of 4.7 billion gloves, which will be reactivated once market supply-demand dynamics improve.
Meanwhile, at plant nine, which has 12 production lines with a total capacity of 4.9 billion gloves per year, the remaining seven lines are scheduled to be commissioned by the end of FY26.
