KUALA LUMPUR, Sept 8 (Bernama) -- Bursa Malaysia closed almost flat on Tuesday as buying interest rotated away from index heavyweights towards smaller-cap construction stocks, with sentiment affected by geopolitical uncertainty, said an analyst. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) eased 0.39 of a point to 1,714.40 from Monday’s close of 1,714.79. The benchmark index opened 1.65 points lower at 1,713.14 and moved between 1,710.44 and 1,714.50 throughout the trading session. The broader market was almost evenly balanced, with decliners leading gainers 548 to 546, while 598 counters were unchanged, 1,107 were untraded and 25 were suspended. Turnover expanded to 4.13 billion units valued at RM3.14 billion from 3.60 billion units valued at RM2.45 billion on Monday.
Hartalega Holdings Bhd is anticipated to report a significant increase in earnings for the first quarter of FY2025, driven by higher utilisation rates and increased sales orders, according to Phillip Capital.
Key Points:
- Earnings Forecast: Hartalega's net profit for the first quarter ended June 30 (1QFY2025) is expected to be between RM45 million to RM55 million, up from RM14 million in 4QFY2024 and RM4 million in 1QFY2024.
- Factors Driving Growth:
- Higher Utilisation Rate: Hartalega's plant utilisation rate is currently at 75%-80%, with monthly sales orders averaging two billion pieces, up from 1.8 billion pieces in 4QFY2024.
- Increased Sales Orders: Continuous customer inventory replenishment is contributing to busier plants.
- Easing Raw Material Prices: This is expected to result in stronger margins.
- Higher Average Selling Price (ASP): ASP per 1,000 pieces has increased by 5% to US$20 (RM91.14)-US$22 from up to US$21 in 4QFY2024.
- Market Performance: Shares of Hartalega have seen a year-to-date increase of nearly 37%, despite recent declines ahead of the results announcement scheduled for August 6.
- Analyst Ratings:
- Phillip Capital: Maintains a "buy" rating with an unchanged target price of RM4.10.
- Consensus: Out of 22 research houses, nine rate the stock 'hold', five recommend 'sell', and eight have 'buy' calls. The consensus 12-month target price is RM3.35, suggesting a potential return of close to 11% from its last price.
- Operational Insights:
- Lead Time: Increased to two-to-three months due to higher orders.
- Product Prices: Hartalega is passing higher costs to customers, supporting higher ASP.
- Competitive Advantage: Phillip Capital cites Hartalega's solid execution track record, superior cost structure, healthy balance sheet, and high net cash level as strengths. The recent US tariff imposition on Chinese glovemakers in 2026 is also seen as beneficial for Hartalega.
Phillip Capital remains optimistic about Hartalega’s future performance, highlighting the company’s ability to navigate market challenges and maintain a strong financial position.
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