Hartalega / Kuan Kam Hon

[winston]

vested

Headroom for more ASP hikes

Strong 2QFY3/21 net profit (+2.5x QoQ) was within our expectation but above that of street.

Its margin could continue to expand in the next 6 months as its ASP hikes outpace the NBR cost increase.

We change our valuation methodology to DCF (from P/E) to better reflect Hartalega’s long-term cash generating capability.

Our TP remains unchanged at MYR20.60, based on WACC of 7.2% and LTG of 4.5%.

At our TP, the implied P/E for CY21E and CY22E are 13x and 17x respectively. BUY.

Source: Maybank

https://factsetpdf.maybank-ke.com/PDF/1 ... 349a1e.pdf

[winston]

vested

Glove shortage will only be rectified by 2024

We remain positive on Hartalega after our recent meeting amid prospects of higher ASPs and strong glove demand sustaining for the next 12 months.

As Hartalega’s ASPs lag those of its peers, it aims to raise its ASPs by 50% qoq in 3QFY20F. It does not discount further hikes in the quarters ahead.

Reiterate Add call with an unchanged TP of RM24.80 (33x CY22 P/E).

Source: CIMB

https://rfs.cgs-cimb.com/api/download?f ... 3F75934AF7

[winston]

vested

The Employees Provident Fund (EPF) has emerged as the substantial shareholder of Hartalega Holdings Bhd, after buying 174.32 million shares or 5.09% stake in the rubber glove maker company.

The block was purchased by EPF on Nov 17 (Tuesday).

However, the transacted price was not disclosed in the filing.

Hartalega shares price closed at RM14.64 that day. Based on the closing price, the block of shares is valued at RM2.55 billion.

The provident fund bought more shares recently to take advantage of the recent share price weakness caused by the positive newsflow on the Covid-19 vaccine development.

Source: The Edge

[winston]

vested

AmInvestment keeps 'hold' on Hartalega, lowers forecast for 2022

KUALA LUMPUR: AmInvestment Bank Research has retained its "hold" recommendation on Hartalega Holdings Bhd while lowering its earnings forecasts for 2022.

"We believe that the stock is fully valued with a PER of more than 35x FY23F EPS," it said.

The research house said the company expects demand to oustrip supply for the next 12 months with a structural step-up where glove demand is expected to grow 12% to 15% per annum.

The glove maker has also guided for average selling price to increase about 50% in the coming quarter.

While AmInvestment raised its FY21 net profit forecasts by 18%, it expects ASP to decline in 2022 with the availability of the vaccine cutting into demand.

"We are cutting our FY22–23 earnings’ estimates by 24% and 30% respectively by lowering ASP assumptions to US$33/1,000 pcs and US$32/1,000 pcs (from US$34 for both)," it said.

Hartalega has closed eight production lines for a month, which will impact output by less than 0.5%.

Source: The Star

https://www.thestar.com.my/business/bus ... t-for-2022

[winston]

vested

Primed to benefit as a laggard in ASPs

We believe that HART’s current valuations (15.4x CY21F P/E) have yet to account for its robust earnings prospects for at least the next 12 months.

As a laggard in raising ASPs in the glove sector, HART aims to raise its ASPs qoq by 50% in 3QFY3/21F and at least 40% qoq in 4QFY3/21F.

HART remains an Add, with an 59.6% upside and CY21F div. yield of 3.9%.

Source: CIMB

https://rfs.cgs-cimb.com/api/download?f ... 576B290C6C

[winston]

vested

Hartalega 3Q net profit surges to RM1 billion, cash pile soars to RM2.14 billion

by Arjuna Chandran Shankar

Hartalega announced its net profit for the third quarter ended Dec 31, 2020 (3QFY21) leapt to a record high of RM1 billion, up nearly 84% against RM544.96 million in the preceding quarter, 2QFY21.

Its revenue grew by 58.2% to RM2.13 billion quarter-on-quarter (q-o-q) against RM1.35 billion in 2QFY21.

The brisk glove sales boosted Hartalega's cash pile to RM2.14 billion.

Hartalega declared a second interim dividend of 9.65 sen, bringing the cumulative dividend payout for the nine months ended Dec 31, 2020 (9MFY21) to 15.6 sen, versus the 5.5 sen registered in 9MFY20.

Source: theedgemarkets.com

https://www.theedgemarkets.com/article/ ... urges-rm1b

[winston]

vested

STRATEGY:

ACCUMULATE (TECHNICAL)

Recent consolidation has ended after share price broke out of the neckline of the “inverted head & shoulder” pattern.

The stock also swung past both the 13 & 33-day SMA lines along the way.

These, together with a bullish reading in RSI and DeTrend indicators, indicate that a new
upcycle is about to unfold in the near term.

Source: Maybank

[winston]

not vested

Hartalega Holdings (HART MK)
3QFY21: Beyond Expectations. ASP Outlook Remains Robust

3QFY21 results came in beyond expectations off sustained ASP revisions going
forward.

Higher NBR cost remains palatable against the backdrop of lofty ASPs.

Plant expansions are well on track.

Expected earnings windfall ahead is likely to coincide with diminishing sentiment as herd immunity is gradually achieved.

Maintain HOLD but with a lower target price of RM13.50. Entry price: RM11.00.

Source: UOBKH

https://research.uobkayhian.com/content ... 032792f69a

[winston]

vested

Growth and yield
Palatable valuations; maintain BUY

3QFY21 net profit jumped 84% QoQ and we expect its 4QFY21 net profit to jump another 50% QoQ on the higher ASP (c.+45% QoQ).

We raise our FY21E EPS by 9% but maintain our FY22-23E (assumes for ASPs to peak in
mid-CY21).

Our DCF-derived TP is lowered by 20% to MYR16.40 (WACC:7.2%, LTG: 4.5%) as we roll forward our valuation base year to FY24E to (from FY21E) better reflect a sustainable valuation in a balanced demand-supply environment.

At our TP, the implied ex-cash PE in FY24E is 39x (+1SD to its 5Y mean), similar to the level it was trading at before COVID-19.

Dividend yield is 4%/8% in FY21E/FY22E. BUY.

Source: Maybank

https://factsetpdf.maybank-ke.com/PDF/2 ... f6a990.pdf

[winston]

The best is yet to come

9MFY3/21 net profit surged 453% yoy to RM1.8bn, beating expectations at 69% of both our and Bloomberg full-year estimates, thanks to strong ASPs.

Hartalega should continue to post stronger results ahead, backed by:
i) higher ASPs,
ii) rise in production capacity and
iii) higher economies of scale.

Reiterate Add, with higher TP of RM21.80 (26x CY22F P/E).

Source: CIMB

https://rfs.cgs-cimb.com/api/download?f ... E5434CF3C4