KUALA LUMPUR – Hartalega Holdings Bhd’s share contracted in the early trading session today after the glove producer announced a lower net profit for the third quarter (Q3) ended December 31, 2021.
At 10.35am, Hartalega declined 33 sen to RM5.24, with 5.85 million shares changing hands.
Hartalega’s Q3 net profit reduced to RM256.1 million from RM1.0 billion a year earlier due to the decline in both average selling price (ASP) and sales volume amid moderating demand, shipping constraints and rising supply from major and new competitors.
Its revenue also slipped 52.8% to RM1.0 billion from RM2.13 billion previously.
CGS-CIMB, in a note, said the earnings prospects of the nitrile glove producer are likely to remain weak in the near term with limited upside potential.
“We expect Hartalega to record losses in the fourth quarter (Q4) of financial year 2022 forecast due to lower ASPs, coupled with the RM375 million impact from the prosperity tax.
“On the bright side, Hartalega expects a gradual uptick in orders from Q4 onwards, thanks to increasing demand from customers in developed markets,” it said.
The research house downgrades its call to “hold” for Hartalega with a lower target price of RM5.80 from RM6.40 previously. – Bernama, February 9, 2022
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