Hartalega / Kuan Kam Hon

[winston]

not vested

FY3/22F tax bill set to rise by RM400m

1HFY3/22 core net profit of RM3.2bn (+317% yoy) was in line with estimates.

Hartalega expects Cukai Makmur, which was announced by the government in its Budget 2022, to increase its 2HFY22F tax liability by RM400m.

Reiterate Add, with a lower TP of RM6.40 (24x CY23F P/E).

Current P/E valuation is attractive, in our view, at a 14% discount to its 10-year mean.

Source: CIMB

https://rfs.cgs-cimb.com/api/download?f ... 3A86FE5A39

[winston]

Prosperity at risk
Profit more than halved in 2QFY22 versus 1QFY22

2QFY3/22 net profit of MYR914m (-60% QoQ, +68% YoY) came in above our estimate.

However, 2HFY22 earnings performance will be weaker no thanks to declining ASP and the additional tax charges arising from the newly announced Prosperity Tax.

We adjust our pre-Prosperity Tax FY22 earnings forecasts by +11%.

Our TP is intact at MYR4.00 on 19.4x CY23 PER (+1sen; -1SD of historical mean). Reiterate SELL.

Source: Maybank

https://mkefactsettd.maybank-ke.com/PDFS/239716.pdf

[winston]

vested

Hartalega Holdings (HART MK)
3QFY22: Below Expectations As Industry Dynamics Continue To Weigh

Results were below expectations as deteriorating industry dynamics weighed heavily
on demand.

ASPs are due to deteriorate further and Hartalega expects its prosperity tax
to be fully realised in the subsequent quarter.

We downgrade Hartalega to SELL as we believe earnings ahead are likely to lead to further disappointments.

Furthermore, valuations appear uncompelling at this juncture.

Target price remains unchanged at RM4.60.

Source: UOBKH

https://research.uobkayhian.com/content ... 7a00784636

[winston]

vested

Hartalega’s target prices, ratings suffer on lower ASPs, one-off prosperity tax

by Syafiqah Salim

74.6% drop in net profit to RM259.06 million in the third quarter ended Dec 31, 2021 (3QFY22), from RM1 billion a year ago, due to lower ASPs and glove sales volume.

Source: theedgemarkets.com

https://www.theedgemarkets.com/article/ ... perity-tax

[winston]

Hartalega Holdings (HART MK)
1QFY23: Below Expectations As Softness Is Expected To Persist

ASPs continue to slide amid flattish volume growth.

Earnings fell below expectations on the back of persistent softness that could last throughout 2023.

Despite Hartalega’s industry-leading efficiency and execution, its prospects are weighed by severe industry headwinds.

Hartalega could be on the verge of dropping out as a FBMKLCI Index constituent.

Downgrade to SELL (from HOLD) with a lower target price of RM2.25 (from
RM2.55).

Source: UOBKH

https://research.uobkayhian.com/content ... 190068f221

[winston]

vested

Falling demand, lower prices drag glove makers

CGS-CIMB Research expects Hartalega’s ASPs to stabilise by 3Q23 at US$22-US$24 (RM98-RM107) per 1,000 pieces.

Hartalega’s management is expecting the utilisation rate to decline going forward. The current utilisation hovers around 50% to 60% in view of intense market competition.

Source: The Star

https://www.thestar.com.my/business/bus ... ove-makers

[winston]

vested

Sustaining market share the priority

By DANIEL KHOO

Hartalega’s production is 90% nitrile gloves.

We are in the midst of building two out of the four plants but we are pacing the construction of these two plants – to take into account how the industry evolves. The plant had been delayed by some three quarters.

Source: The Star

https://www.thestar.com.my/business/bus ... e-priority

[winston]

vested

Hartalega eyes M&A in diversification push

by Chong Jin Hun

To mitigate risks of being just an original equipment manufacturer (OEM) producer of gloves with plants only in Malaysia.

Plans to diversify its customer base to reduce concentration risks.

Its strategic initiatives include its original brand manufacturer (OBM) strategy "to build a regional multiple medical device distribution company focusing on markets in Asia Pacific.

Current annual glove production capacity of 44 billion pieces and that its targeted production capacity is 95 billion pieces of gloves annually.

Cash and cash equivalents amounting to RM2.04 billion as at June 30, 2022 compared to RM2.38 billion as at March 31, 2022.

Source: theedgemarkets.com

https://www.theedgemarkets.com/article/ ... ation-push

[winston]

vested

Hartalega earnings remain subdued on oversupply situation

In the second financial quarter ended Sept 30, 2022, Hartalega posted a net profit of RM28.34mil, which compares to a net profit of RM914mil in the year-ago quarter.

Earnings per share came to 83 sen compared with 26.74 sen in 2QFY22.

Revenue in the three-month period was down to RM584.56mil versus RM2.01bil a year earlier.

Source: The Star

https://www.thestar.com.my/business/bus ... -situation

[winston]

Hartalega Holdings (HART MK)
2QFY23: No Escaping Industry Headwinds

Volume sales took a hit as inventory levels remained elevated amid excess capacity
among major players.

With the drop in sales, coupled with softer ASPs and higher costs, earnings disappointed expectations.

Despite Hartalega’s industry-leading efficiency and execution, its prospects are weighed by severe industry headwinds.

Furthermore, Hartalega is on the verge of dropping out as a FBMKLCI constituent.

Maintain SELL but with a lower target price of RM1.50 (from RM2.25).

Source: UOBKH

https://research.uobkayhian.com/content ... 2c4946c062