Hartalega's earnings outlook appears promising with expectations for improved financial performance, driven by stronger sales volumes and higher average selling prices (ASPs), according to reports by RHB Investment Bank (RHB) and other analysts. The glove manufacturer is anticipated to deliver a core profit of RM20-25 million for 1QFY25, a significant rebound from RM1.8 million in 4QFY24, supported by a forecasted 13.6% sequential revenue growth and a recovery in ASPs.
RHB maintains a BUY rating on Hartalega with a target price of RM4.10, reflecting a potential upside of 22.7%. The bank highlights an improving demand outlook and more receptive market dynamics for glove manufacturers. RHB's positive stance is based on anticipated earnings recovery and robust balance sheet strength, although a 2% discount was applied to the target price due to Hartalega's ESG score being slightly below the national median.
Hartalega is projected to benefit from a favourable shift in industry dynamics, with increased customer acceptance of ASP hikes and a narrowing pricing gap with Chinese competitors. The company's operational efficiency is expected to rise, with estimated improvements in net margin and revenue performance. Despite higher nitrile and natural gas costs, the overall financial outlook remains strong, making Hartalega a compelling investment opportunity for those looking at the glove sector's recovery.