KUALA LUMPUR (Nov 12): Hartalega Holdings Bhd (KL:HARTA) earnings recovery will take longer than expected, analysts say, as they stay cautious of headwinds from supply glut and soft prices.

Results for the first six months announced on Wednesday were sharply behind consensus’ full-year forecast, prompting a scramble to slash estimates. The world’s largest nitrile glove maker is now expected to make a net profit of RM68 million for the year ending March 31, 2026.

Any adjustment to product selling prices from rising demand will be “limited, given the rising global supply backdrop,” Hong Leong Investment Bank said and kept Hartalega on a "hold" call.

The majority of research houses are cautious on Hartalega. Out of 21 recommendations compiled by Bloomberg, two are “buy”, 14 are “hold” and five are “sell” calls. The average target price is RM1.27, implying a potential gain of less than 8% from the last price.

Shares of Hartalega traded in a tight range between a loss of five sen and a gain of three sen on Wednesday and were last at RM1.16. The stock declined more than 70% since the year began, a decline that has wiped out more than RM9 billion from its market capitalisation.

The industry is grappling with a massive supply glut as rivals from China set up shop and ramp up their productions in other Southeast Asian countries to dodge US tariffs. A deluge of Chinese-made gloves in non-American markets has also added to the pressure faced by Malaysian manufacturers.

The ringgit, meanwhile, has appreciated more than 7% against the US dollar so far this year, eroding the value of sales priced in the greenback when translated into Hartalega’s reporting currency.

“We believe Hartalega’s near-term performance will hinge on sustaining cost advantages and operational efficiency to counter headwinds” to average selling prices (ASPs), BIMB Securities said.

Earnings growth may be “plateauing over the next few quarters, given that utilisation is already near optimal and ASPs are likely to stay flattish,” the house added.