Hong Leong Investment Bank Bhd (HLIB) has maintained its HOLD call on Hartalega Holdings Bhd with an unchanged target price of RM1.32, noting that while the glove maker has made progress on its environmental targets, uncertainties remain in the sector’s supply-demand outlook.
HLIB said Hartalega’s focus under its sustainability framework has been on managing natural resources, reducing emissions, and improving water and energy efficiency. The group has set a target of cutting carbon emissions intensity by 25% by FY2026 against its FY2023 baseline, aligning with Malaysia’s national aspirations to achieve net zero emissions by 2050.
However, in FY2025, carbon emissions intensity held steady year-on-year as efficiency gains were offset by challenges in integrating production lines from the decommissioned Bestari Jaya facility.
Despite this, Hartalega recorded a significant improvement in electricity consumption intensity, which fell 35.4% year-on-year to 3.34kWh per 1,000 pieces, while water consumption intensity improved 27.2% year-on-year, allowing the company to achieve its FY2026 water efficiency target one year early.
Waste intensity also improved by 16.7%, mainly due to reductions in non-hazardous waste, though hazardous waste volumes rose in line with higher production levels. Importantly, the group reported zero environmental non-compliance incidents in FY2025.
The research house highlighted that these operational improvements have helped lower costs, with energy savings contributing to a 1.7% year-on-year improvement in cost of goods sold. From a financial perspective, Hartalega remains supported by a solid net cash position of RM986 million as at 1QFY2026, or RM0.29 per share, giving the company flexibility despite ongoing market challenges.
Earnings forecasts for FY2026–28 remain unchanged, as HLIB said the current outlook had already been factored into prior revisions. It added that Hartalega’s efforts to decommission less efficient facilities, together with automation initiatives and production line enhancements, should strengthen its position as one of Malaysia’s most efficient producers of generic medical examination gloves.
As of 10.46 am, the stock price is at RM1.190 (down 0.83%).
