KUALA LUMPUR (Aug 6): Hartalega Holdings Bhd (KL:HARTA) fell to its lowest in more than a decade as investors reacted to an unexpectedly weak quarter while analysts cut their outlook.
The company started its financial year ending March 2026 (FY2026) meeting just 6% of the consensus net profit estimate, prompting a series of cuts to earnings estimates. At least two research houses downgraded the stock to ‘sell’.
“The outlook remains bleak” as oversupply limits manufacturers’ ability to raise average selling prices meaningfully in the near term despite a potential recovery in sales volume in the upcoming quarters, said AmInvestment Bank in lowering Hartalega’s rating to ‘sell’.
The stock fell nearly 7% to RM1.23, its lowest since December 2014, shortly after trading opened. It recovered slightly to RM1.28 after 30 minutes of the trading session, but the momentum failed to hold, with the counter ending the session 6% lower at RM1.24, down eight sen from Tuesday’s close of RM1.32.
A total of 25.16 million shares changed hands during the day, giving the company a market capitalisation of RM4.25 billion.
Shares of Hartalega have declined 68% so far this year, erasing over RM9 billion from their value, as the world’s largest nitrile glove manufacturer battles persistent global glut and intense competition.
Chinese rivals have been setting up shop in Vietnam, Indonesia, and Cambodia to dodge US tariffs while providing steep discounts for their products in non-American markets. The industry is also facing cost pressures at home.
Apart from higher electricity tariffs and minimum wage, Hartalega has also disclosed an additional tax assessment of RM101.4 million for 2017-2022.
Failure to reverse the tax bill could wipe out “a large portion" of profit and shrink margins, BIMB Securities cautioned. “We view this as a negative overhang on the stock amid ongoing margin recovery efforts,” the research house added after downgrading its rating on Hartalega to ‘sell’.
There are now six ‘sell’, 12 ‘hold’, and three ‘buy’ calls among the research houses covering the stock following the latest revisions. The average target price is now RM1.63, according to Bloomberg, implying potential returns of 31% over the next 12 months.