Maybank Investment Bank (Maybank IB) reaffirms a ‘buy’ rating for Hartalega Holdings Bhd (KL) at RM3.19, maintaining an unchanged target price (TP) of RM4.50.
The glove maker’s average selling price (ASP) outlook is improving as it passes higher raw material costs to customers. If demand surges due to tight supply, ASPs could further improve.
Maybank IB said that the worst is over, and the glove sector is poised to recover from a nearly three-year downturn.
“We continue to like Hartalega for its hands-on management, proven track record in technology and product quality, and strong balance sheet (with net cash of 40 sen per share).
“We peg Hartalega’s valuation to its historical price-to-book value mean of 3.2 times. In our view, this methodology is useful for evaluating turnaround sectors/stocks,” Maybank IB said.
Maybank IB expects raw material costs to trend down post the natural rubber wintering season from May 2024. With stable ASPs and better cost efficiency, Hartalega anticipates stronger earnings, signaling recovery from a nearly three-year downturn. Hartalega’s strong management, technology, and balance sheet contribute to its positive outlook.
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