KUALA LUMPUR: Hartalega Holdings Bhd's outlook remains bright, driven by sequential improvements in sales volume as customers continue to restock their depleting inventories, said Public Investment Bank Bhd (PublicInvest).
Although average selling price (ASPs) present upside challenges, PublicInvest is optimistic about Hartalega's strategic initiatives, particularly in the development of the new Next Generation Integrated Glove Manufacturing Complex (NGC) 1.5 line.
"This is anticipated to accommodate increasing orders and enhance overall efficiency.
"We view this development positively and hence, raising our financial year 2025 (FY25) earnings forecast by 13 per cent to account for higher sales volume, while maintaining our FY26 to FY27 earnings projections.," it said in a note.
PublicInvest said Hartalega reported a net profit of RM31.9 million in the first quarter (Q1) 2025, marking a 111 per cent quarter-on-quarter (QoQ) increase from RM15.1 million in 4QFY24, primarily driven by higher sales volume and ASPs.
After adjusting for non-operating items, Hartalega's core net profit stood at RM36.7 million in Q1 2025, compared to a core net loss of RM1.5 million in Q4 2024.
"While these results came in below market expectations at 19 per cent, they exceeded our projections, reaching 36 per cent of our full-year forecast, mainly due to a higher-than-anticipated sales volume.
"All told, we upgrade our call on Hartalega from Neutral to Outperform with a higher target price of RM3.16 from RM2.65 previously," it added.