On Wednesday, Hartalega Holdings Berhad (HART:MK) (OTC: HHBHF), a leading manufacturer of nitrile gloves, received an upgraded stock rating from CLSA from 'Underperform' to 'Outperform'. The firm also raised its price target for the company's shares to MYR4.20, up from MYR2.30.
The adjustment by CLSA comes after a review of Hartalega's first half of 2025 core earnings, which were deemed to align with expectations. However, the financial institution has increased its earnings per share (EPS) estimates for fiscal years 2026-2027 by 32% to 53%. This revision is based on higher average selling price (ASP) and capacity assumptions for Hartalega.
A significant factor influencing the positive outlook is the anticipated impact of US tariff hikes on Chinese gloves. CLSA believes that these tariffs could allow Hartalega to raise its ASPs starting January 2025, particularly for orders from the United States, which accounted for 60% of its sales in the second quarter of 2025.
The report also highlights the potential for improved profit margins due to stabilizing input costs and increased economies of scale. These factors contribute to the analyst's decision to raise the target price and upgrade the stock's rating.
The upgrade and new price target reflect a more optimistic view of Hartalega's future financial performance, considering the strategic advantages the company may gain in the face of international trade developments.
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