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.
After a grueling downcycle, Hartalega Holdings Bhd (KL:HARTA) is showing signs of a potential turnaround. The glove maker, once battered by post-pandemic oversupply and predatory pricing, is now regaining its footing — thanks to a confluence of trade tariffs, automation efforts, and the slow but steady return of US-based demand.
US Tariffs May Spark Sudden Reorder Wave
The United States has imposed hefty 80–130% tariffs on Chinese medical gloves, a move that effectively narrows the pricing gap between Malaysian and Chinese producers. As US glove inventories dwindle and buyers brace for price normalization, analysts believe replenishment could accelerate.
“Despite some buyers still adopting a wait-and-see approach, order visibility is improving, and a sudden uptick in orders isn’t off the table,” Kenanga Research noted in its company update.
Hartalega, which now derives 70% of its glove sales from the US (vs. its historical average of 50%), stands to benefit the most.
Efficiency Through AI and Automation
To counter rising costs and tight margins, Hartalega is doubling down on automation. Its production lines are being upgraded with AI-powered defect detection and high-speed stripping machines, projected to reduce labor needs and boost yields by 2026. A 1% improvement in EBITDA margin could raise FY26 earnings by 11%.
“HARTA’s strategy to reduce SKUs and streamline operations will not only cut costs but also improve efficiency — a smart move in a price-sensitive industry,” Kenanga noted.
Valuation: Trading Near Historical Bottoms
With the stock trading at a steep 60% YTD decline and a forward PER of 34.1x, analysts believe Hartalega is already priced for the worst. Kenanga pegs a target price of RM3.20, more than double the current price of RM1.56.
“The stock is currently trading at 2.0 standard deviations below its historical 1-year forward average — a level that often precedes a rebound,” the report stated.
Earnings Momentum Building
FY25 net profit: RM74.5 million
FY26 forecast: RM155.6 million (+108.8%)
Dividend yield: 5.5% in FY25 (expected to normalize at 1.8–2.5%)
Bottom Line
While the road ahead still depends on tariff clarity and global demand stability, Hartalega’s fundamentals are gradually improving. Its forward-looking cost optimization and favorable tariff dynamics make it a compelling “Outperform”candidate for investors with a mid-to-long-term view.
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