HARTA: Operational Efficiencies Underpin Strong Performance Amidst Challenging Market

TA Securities has noted that the company’s interim half-year 2026 (IHFY26) net profit of RM30.9 million aligns
with expectations, accounting for 42.4% of the firm’s full-year estimate and 35.6% of consensus forecasts.
Despite a year-on-year decline in net profit, the company demonstrated a significant turnaround in its
profit before tax (PBT) performance, driven by robust operational improvements.

Performance Review

The company recorded a commendable PBT of RM37.8 million in IHFY26, a stark reversal from the
Loss Before Tax (LBT) of RM6.3 million reported in IHFY25. This improvement is primarily attributed to enhanced
production efficiency and an optimized workforce.

On a quarter-on-quarter basis, 2QFY26 saw PBT surge by 63.8% to RM23.5 million, even as revenue
experienced a modest 2.4% decline to RM539.7 million. The stronger performance was a direct result of
aggressive cost optimisation efforts and a 1.7% increase in sales volumes, particularly due to higher
orders from US customers. The overall utilisation rate for 2QFY26 also saw a slight uptick, rising to 68%
from 67% in 1QFY26.

However, the IHFY26 net profit did see a 23.8% year-on-year decrease. This was largely due to three factors:
the recognition of deferred tax assets in IHFY25, a 6.8% reduction in sales volume, and a 5.2% decrease
in average selling prices (ASP). Additionally, the quarter-on-quarter revenue decline was influenced by
lower ASPs and the strengthening of the Ringgit.

Future Outlook

Looking ahead, the global demand for gloves is anticipated to grow, supported by a gradual recovery in
global healthcare spending. Despite this positive trend, the market continues to grapple with an oversupply
situation, which is expected to keep ASPs largely flat. Management highlighted a persistent price gap of
around USD2-3 per 1,000 gloves between the US and non-US markets.

The company remains committed to enhancing production efficiency through further automation and aims to
reduce its headcount to below 5,800 from the current 6,000 employees. Strategic plans include upgrading
Plant 3 and Plant 4 (each with 4.7 billion capacity), which will be reactivated once market supply-demand
dynamics improve. Furthermore, the remaining 7 lines of Plant 9 (with 4.9 billion capacity per annum) are
scheduled for commissioning by the end of FY26.

Valuation and Recommendation

TA Securities has maintained its “Hold” recommendation on the company, with an unchanged
target price of RM1.26 per share. This valuation is based on 1.0x FY27 Price-to-Book (P/B) ratio
and incorporates a 3% ESG premium.