Phillip Capital Research expects the company’s performance to remain subdued in FY26.
PETALING JAYA: Hartalega Holdings Bhd
’s earnings are expected to turn the corner from financial year ending March 31, 2027 (FY27) as capacity utilisation improves while the glove maker continues to grapple with weak pricing power and currency headwinds in the near term.
Phillip Capital Research said: “Earnings are anticipated to recover from FY27, with plant utilisation projected to increase to 80% in FY27 and 85% in FY28, underpinned by stronger global demand and easing inventory overhang.”
For FY26, however, the research house expected the company’s performance to remain subdued.
Plant utilisation is projected to rise to 75% from 69% in FY25, supported by firmer demand from the US market, but earnings are forecast to decline 5% year-on-year due to the appreciation of the ringgit against the US dollar.
Blended average selling prices are expected to stay at US$20 to US$21 per 1,000 pieces through FY26 to FY28 as competition remains intense, particularly outside the United States.
It added that cost pressures are easing, but not enough to materially lift profitability. Raw materials and natural gas account for about 60% of Hartalega’s total production costs.
In the fourth quarter of 2025 (4Q25), nitrile latex prices fell 10.8% quarter-on-quarter to US$0.89 per kg due to higher yields, while natural rubber latex rose 2.9% to US$1.42 per kg amid weather-related supply disruptions.
Domestic gas prices, based on the Malaysia Reference Price, also declined 6.6% year-on-year.
Overall, raw material costs are expected to stabilise in 2026, providing some cost relief, but Phillip Capital Research cautioned that margin expansion is likely to remain limited amid continued pricing pressure.
Operationally, sales volumes reached six billion pieces in 2Q26 and are expected to rise modestly to 6.3 billion pieces in 3Q26, driven by US restocking activity.
Plant eight is fully operational, while plant nine is being ramped up, with five production lines currently running and the remaining seven scheduled for commissioning by March 2026.
Automation initiatives and headcount rationalisation have lowered overall manufacturing costs by more than 8%, with workforce numbers reduced by 16% to around 6,000.
Phillip Capital Research projected 3Q26 profit at RM16mil, unchanged from the previous quarter, noting that higher utilisation and volumes would be partially offset by the stronger ringgit.
Reflecting on the structural challenges and global oversupply, the research house maintained its “hold” call and cut its target price to 89 sen, citing ongoing structural challenges and global overcapacity and a challenging cost pass-through environment.
