KUALA LUMPUR (Aug 1): Hartalega Holdings Bhd (KL:HARTA) is expected to report a jump in earnings in the first quarter, driven by higher utilisation rate and increased sales orders, according to Phillip Capital.
Net profit for the first three months ended June 30 (1QFY2025) will likely come in at RM45 million to RM55 million, Phillip Capital said in a results preview note on Thursday. Hartalega's net profit stood at RM14 million in 4QFY2024 and RM4 million in 1QFY2024.
“We anticipate stronger margins from the easing of raw material prices and a hike in average selling price (ASP),” Phillip Capital said. Hartalega’s plants are also likely busier with continuous customer inventory replenishment, the research house said.
Shares of Hartalega have pared gains in recent days ahead of the results announcement slated for Aug 6. Year-to-date, the stock is still up nearly 37% following a turnaround in 4QFY2024.
Phillip Capital maintained its "buy" rating on Hartalega with an unchanged target price of RM4.10. The consensus, meanwhile, are cautious on Hartalega.
Out of 22 research houses covering Hartalega, nine rate the stock ‘hold’, five recommend ‘sell’, and eight have ‘buy’ calls. The consensus 12-month target price is RM3.35, according to Bloomberg, a potential return of close to 11% from its last price.
Hartalega is currently operating at a 75%-80% plant utilisation rate attributable to higher monthly sales orders averaging two billion pieces compared to 1.8 billion pieces in 4QFY2024, Phillip Capital noted.
The research house expects higher product prices as Hartalega passes higher cost to customers, with a 5% increase in ASP per 1,000 pieces to US$20 (RM91.14)-US$22 from up to US$21 in 4QFY2024. Lead time has increased to two-to-three months on higher orders, it flagged.
“We continue to like Hartalega for its solid execution track record, superior cost structure, and healthy balance sheet backed by a high net cash level and the recent US tariff imposition on Chinese glovemakers in 2026,” Phillip Capital added.