Hot Stock Hartalega rises 2.7% as nitrile gloves lead rubber gloves’ demand

by **Cals** Fri 03 Jul 2015, 01:40

Hot Stock
Hartalega rises 2.7% as nitrile gloves lead rubber gloves’ demand

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By Joshua Lim / theedgemarkets.com | July 2, 2015 : 3:53 PM MYT

KUALA LUMPUR (July 2): [size=14]Hartalega Holdings Bhd ([You must be registered and logged in to see this image.] Financial Dashboard) rose as much as 2.7% or 23 sen today, making it one of the top 10 gainers across the local bourse at press time, as a research house said demand for rubber gloves remains unabated, with nitrile gloves leading the way.

As at 3.28pm, Hartalega (fundamental: 2.6; valuation: 0.5) was up 17 sen or 1.98% at RM8.74, which gives it a market capitalisation of RM7.17 billion.

In a note to clients today, Kenanga Research said nitrile gloves is leading demand for the rubber gloves sector and that it likes Hartalega for its innovation in producing superior quality products.

“We like Hartalega for its innovation in producing superior quality nitrile gloves, and positioning in a booming nitrile segment with a dominant market position,” the research house said.

Hartalega’s nitrile glove segment contributed to 90% of the group’s revenue in its fourth financial quarter of financial year 2015 (4QFY15), which was 3.5% higher than its previous corresponding quarter.

Kenanga also noted that Hartalega’s highly automated production processes model and solid improvement in its production processes and reduction in costs lead to higher margins compared to its peers.

“We expect earnings to kick in upon gradual ramp up of the Next Generation Integrated Glove Manufacturing Complex (NGC), (known as Plant 7) as it begins commercial production, deriving benefits from economies of scale,” it said.

The research house added that the rubber gloves manufacturer had highlighted that its NGC plants has started commercial operations gradually from January 15, 2015 onwards with a planned commissioning of two lines per month. It has currently commenced eight lines.

“Hartalega is relatively confident that capacity for the first plant will be absorbed upon full commissioning,” it added.

Upon full commissioning, Hartalega’s new capacity will be increased by 56% by October 2015, providing much needed earnings growth boost for its FY16.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)
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