KUALA LUMPUR: Hartalega Holdings Bhd’s earnings within the third quarter ended Dec 31, 2021 (3Q22) is anticipated to be weaker on a quarter-on-quarter (QoQ) foundation, in accordance with AmInvestment Bank Research.
Hartalega is anticipated to launch its 3Q22 earnings within the first half of February.
“Due to the ongoing trend of lower average selling prices (ASP) for gloves, we expect 3QFY22 earnings to be weaker QoQ.
“However, its balance sheet should remain strong with a solid net cash position,” AmInvestment mentioned in a report.
The analysis home has maintained its “hold” name on Hartalega Holdings Bhd with an unchanged truthful worth of RM6.
“We have imputed a 3% premium for an ESG rating of four stars. Our valuation is based on a PER of 18x FY23F,” it mentioned.
“We believe that the upside is capped as the ASP downtrend continues. Having said that, the downside is also limited as its share price has fallen to around the pre-pandemic level of RM5.92, which was last recorded on Jan 31, 2020,” AmInvestment mentioned.
The analysis home made no modifications to its FY22F, FY23F and FY24F earnings estimates of RM4.15bil, RM1.11bil and RM904mil respectively.
AmInvestment famous that Hartalega was at the moment increasing its Plant 7 though the pace of growth had slowed down.
As of end-September 2021, Hartalega has commissioned 8 out of 10 strains in Plant 7. This has elevated its whole capability to 44 billion items each year.
On its utilisation charge, AmInvestment expects it to be within the vary of 60–70% in view of the excessive provide that has been coming into the market previously one 12 months.
“On the positive side, this also means that there is no shortage of foreign workers in the next 6–12 months for the company,” it added.
Despite the surge of Covid-19 instances globally as a result of Omicron variant, it famous that mentioned the ASP for gloves was nonetheless on a downtrend because the market had been flooded with a excessive provide of gloves in 2021.