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PUBLIC INVESTMENT BANK
HARTALEGA HOLDINGS BERHAD
Wednesday, August 6, 2025
Among the world’s largest glove manufacturer by market capitalization. Renowned for its innovative technological methods.
- 12-month Target Price
- RM1.44
- Current Price
- RM1.32
- Expected Return
- 9.1%
- Previous Target Price
- RM2.05
- Market
- Main
- Sector
- Rubber Gloves
- Bursa Code
- 5168
- Bloomberg Ticker
- HART MK
- Shariah-Compliant
- Yes
[Chart data from 1.00 to 4.00, Feb-25 to Aug-25, is represented textually as images are not permitted.]
- 52 Week Range (RM)
- 1.31-4.00
- 3-Month Average Vol (‘000)
- 7,093.1
| 1M | 3M | 6M | |
|---|---|---|---|
| Absolute Returns | -13.7 | -39.7 | -62.5 |
| Relative Returns | -13.1 | -38.1 | -61.3 |
- Market Capitalisation (RMm)
- 4,505.5
- No. of Shares (m)
- 3,413.3
| % | |
|---|---|
| Hartalega Industries Sdn Bhd | 34.4 |
| Budi Tenggara Sdn Bhd | 8.6 |
| Kumpulan Wang Persaraan | 5.6 |
Below Expectations
Hartalega posted a net profit of RM12.6m in 1QFY26, falling 61% YoY from RM31.9m, primarily due to lower sales volume and ASPs. After adjusting for non-operating items, Hartalega’s core net profit stood at RM8.3m in 1QFY26, down 77% YoY from RM36.7m in 1QFY25. The results came in below both our and streets’ estimates at only 5% and 6% of full-year forecasts respectively. The discrepancy in our earnings forecasts was mainly due to the lower-than-expected ASPs and sales volume. Given the challenging operating environment, marred by industry overcapacity and aggressive price competition from Chinese players, we cut our FY26F-28F earnings forecasts by an average of 31% to reflect lower sales volume and ASPs going forward. All told, we reiterate our Neutral call on Hartalega, with a lower TP of RM1.44, pegged to 1.2x CY26F BVPS, near -1SD of its 1-year historical mean.
Revenue. Hartalega’s 1QFY26 revenue declined by 9.6% QoQ on lower sales volume while blended ASP fell by 5% to c.USD21/1k pcs. As US customers front-loaded their purchases to stockpile ahead of the expected tariff increase, orders were coming in slower-than-expected. This was aggravated by sustained pricing pressure from Chinese players. As a result, Hartalega’s utilisation rate declined to 67% in 1QFY26 (from 77% in 4QFY25), based on 37bn pcs/annum in 1QFY26.
Net profit. After stripping off the non-operating items, Hartalega reported a core net profit of RM8.3m in 1QFY26, compared to a loss of RM5.5m. Hartalega continues to focus on cost optimisation efforts, having trimmed its workforce from 8k to 6.3k, with further reduction anticipated as automation initiatives kick in. Additionally, the current headcount of 6.3k is able to support production capacity of 2.3bn pcs/month compared to current output of 2.2bn pcs/month, suggesting there is room for headcount reduction.
Outlook. We believe Hartalega will continue to operate in a challenging environment, weighed by rising operating costs, persistent industry overcapacity and aggressive price competition from regional players, particularly from China. Pricing pressure is expected to persist, especially in the non-US markets where Chinese manufacturers continue to offer products at steep discount of c.USD14-15/1k pcs. All told, we remain our Neutral call on Hartalega.
| FYE Mar (RM m) | 2024A | 2025A | 2026F | 2027F | 2028F | CAGR |
|---|---|---|---|---|---|---|
| Revenue | 1,838.1 | 2,585.6 | 2,460.8 | 2,492.8 | 2,524.7 | 8.3% |
| Gross Profit | 155.7 | 244.3 | 289.6 | 299.8 | 280.3 | 15.8% |
| Op. Profit | 46.1 | 50.0 | 77.2 | 84.6 | 191.9 | 42.8% |
| PBT | 38.5 | 47.9 | 76.9 | 84.3 | 191.7 | 49.4% |
| Net Profit | 12.5 | 74.5 | 108.5 | 119.1 | 297.6 | >100% |
| Core Net Profit | 24.3 | 84.1 | 108.5 | 119.1 | 297.6 | |
| EPS (Sen) | 0.4 | 2.2 | 3.2 | 3.5 | 8.7 | |
| P/E (x) | 360.6 | 60.4 | 41.5 | 37.8 | 15.1 | |
| DPS (Sen) | 0.4 | 11.4 | 4.0 | 4.5 | 5.5 | |
| Div Yield | 0.3% | 8.6% | 3.0% | 3.4% | 4.2% |
Source: Company, PublicInvest Research estimates
T 603 2268 3012
F 603 2268 3014
E thye.mayting@publicinvestbank.com.my
Table 1: Results Summary
| FYE Mar (RM m) | 1Q26 | 1Q25 | 4Q25 | YoY chg (%) | QoQ chg (%) | YTD 26 | YTD 25 | YoY chg (%) | Comments |
|---|---|---|---|---|---|---|---|---|---|
| Revenue | 553.1 | 583.8 | 611.5 | -5.3 | -9.6 | 553.1 | 583.8 | -5.3 | Blended ASPs dropped 5% YoY. |
| Operating profit | 7.7 | 34.6 | 9.6 | -77.7 | -19.8 | 7.7 | 34.6 | -77.7 | |
| EBIT | 14.4 | 42.2 | 17.8 | -65.8 | -19.0 | 14.4 | 42.2 | -65.8 | |
| Finance costs | -0.1 | -1.0 | -0.1 | -91.8 | -43.0 | -0.1 | -1.0 | -91.8 | |
| PBT | 14.3 | 41.1 | 17.6 | -65.2 | -18.8 | 14.3 | 41.1 | -65.2 | Higher PBT in 1QFY25 due to disposal of Bestari Jaya facility. |
| Taxation | -2.0 | -9.2 | -3.0 | 78.4 | 34.4 | -2.0 | -9.2 | 78.4 | |
| Minority interest | 0.3 | 0.0 | -0.1 | >100 | >100 | 0.3 | 0.0 | >100 | |
| Net Profit | 12.6 | 31.9 | 14.5 | -60.5 | -12.9 | 12.6 | 31.9 | -60.5 | |
| Core Net Profit | 8.3 | 36.7 | -5.5 | -77.4 | >100 | 8.3 | 36.7 | -77.4 | |
| EPS (sen) | 0.37 | 0.94 | 0.42 | 0.37 | 0.94 | ||||
| Op. Profit Margin | 1.4% | 5.9% | 1.6% | 1.4% | 5.9% | ||||
| EBIT Margin | 2.6% | 7.2% | 2.9% | 2.6% | 7.2% | ||||
| PBT Margin | 2.6% | 7.0% | 2.9% | 2.6% | 7.0% | ||||
| Net Profit Margin | 2.3% | 5.5% | 2.4% | 2.3% | 5.5% |
Source: Company
KEY FINANCIAL DATA
INCOME STATEMENT DATA
| FYE Mar (RM m) | 2024A | 2025A | 2026F | 2027F | 2028F |
|---|---|---|---|---|---|
| Revenue | 1,838.1 | 2,585.6 | 2,460.8 | 2,492.8 | 2,524.7 |
| Cost of sales | -1,682.4 | -2,341.4 | -2,171.2 | -2,193.0 | -2,244.4 |
| Operating Profit | 46.1 | 50.0 | 77.2 | 84.6 | 191.9 |
| Other Gains / (Losses) | 69.8 | 70.8 | 0.0 | 0.0 | 0.0 |
| Finance Costs | -7.6 | -2.1 | -0.3 | -0.3 | -0.2 |
| Pre-tax Profit | 38.5 | 47.9 | 76.9 | 84.3 | 191.7 |
| Income Tax | -18.7 | 26.5 | 42.4 | 46.5 | 105.8 |
| Effective Tax Rate (%) | 49% | -55% | -55% | -55% | -55% |
| Net Profit | 12.5 | 74.5 | 108.5 | 119.1 | 297.6 |
| Core Net Profit | 24.3 | 84.1 | 108.5 | 119.1 | 297.6 |
| Growth | |||||
| Revenue | 41% | -5% | 1% | 1% | |
| Operating Profit | 8% | 54% | 10% | >100% | |
| Net Profit | >100% | 46% | 10% | >100% |
Source: Company, PublicInvest Research estimates
BALANCE SHEET DATA
| FYE Mar (RM m) | 2024A | 2025A | 2026F | 2027F | 2028F |
|---|---|---|---|---|---|
| Property, Plant & Equipment | 1901.0 | 2573.1 | 2859.0 | 2866.1 | 2894.4 |
| Cash and Cash Equivalents | 1,427.4 | 923.1 | 1,033.7 | 1,108.3 | 1,295.0 |
| Receivables, deposits & prepayment | 386.7 | 385.6 | 367.5 | 372.3 | 377.1 |
| Other Assets | 1,542.5 | 860.7 | 463.2 | 355.3 | 249.8 |
| Total Assets | 5,257.6 | 4,742.5 | 4,723.5 | 4,702.0 | 4,816.2 |
| Payables | 316.8 | 229.6 | 228.8 | 231.1 | 236.5 |
| Borrowings | 66.6 | 4.1 | 3.1 | 2.1 | 1.1 |
| Deferred tax | 221.5 | 180.1 | 180.1 | 180.1 | 180.1 |
| Other Liabilities | 5.0 | 6.5 | 17.3 | 29.0 | 29.0 |
| Total Liabilities | 609.9 | 420.3 | 429.2 | 442.2 | 446.6 |
| Shareholders’ Equity | 4,647.7 | 4,322.3 | 4,294.3 | 4,259.8 | 4,369.6 |
| Total Equity and Liabilities | 5,257.6 | 4,742.5 | 4,723.5 | 4,702.0 | 4,816.2 |
Source: Company, PublicInvest Research estimates
PER SHARE DATA & RATIOS
| FYE Mar | 2024A | 2025A | 2026F | 2027F | 2028F |
|---|---|---|---|---|---|
| Book Value Per Share | 1.4 | 1.3 | 1.3 | 1.2 | 1.3 |
| NTA Per Share | 1.3 | 1.3 | 1.2 | 1.2 | 1.3 |
| EPS (Sen) | 0.4 | 2.2 | 3.2 | 3.5 | 8.7 |
| DPS (Sen) | 0.4 | 11.4 | 4.0 | 4.5 | 5.5 |
| Payout Ratio | 96% | >100% | 60% | 60% | 60% |
| ROA | 0.2% | 1.6% | 2.3% | 2.5% | 6.2% |
| ROE | 0.3% | 1.7% | 2.5% | 2.8% | 6.8% |
Source: Company, PublicInvest Research estimates
RATING CLASSIFICATION
STOCKS
SECTOR
DISCLAIMER
This document has been prepared solely for information and private circulation only. It is for distribution under such circumstances as may be permitted by applicable law. The information contained herein is prepared from data and sources believed to be reliable at the time of issue of this document. The views/opinions expressed herein are subject to change without notice and solely reflects the personal views of the analyst(s) acting in his/her capacity as employee of Public Investment Bank Berhad (“PIVB”). PIVB does not make any guarantee, representations or warranty neither expressed or implied nor accepts any responsibility or liability as to its fairness liability adequacy, completeness or correctness of any such information and opinion contained herein. No reliance upon such statement or usage by the addressee/anyone shall give rise to any claim/liability for loss of damage against PIVB, Public Bank Berhad, its affiliates and related companies, directors, officers, connected persons/employees, associates or agents.
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PUBLIC INVESTMENT BANK BERHAD (20027-W)
26th Floor, Menara Public Bank 2,
78, Jalan Raja Chulan,
50200 Kuala Lumpur
T 603 2268 3000
F 603 2268 3014
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