Hong Leong Cuts HARTA to Sell as 2Q Profit Falls 52%, Warns Margin Optimism Is Overdone

Ng Han Siang (Einod) · November 13, 2026

AI-assisted, reviewed by Ng Han Siang (Einod)

Hong Leong Investment Bank analyst Chee Kok Siang downgraded Hartalega Holdings to “Sell” from “Hold”, cutting his target price to RM0.80 from RM0.97, implying a 24.5% downside. Its 2QFY27 core net profit fell 52% QoQ to RM33.4 million as higher-cost raw-material inventories entered production, although profit rose 87% YoY. First-half earnings were in line with his expectations.

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Chee believes investors have been overly optimistic about margin expansion following the oil-price rally. Without sustained shortages of nitrile butadiene rubber (NBR), he expects structural glove oversupply to persist. Falling selling prices could also coincide with higher-cost NBR inventories entering production, squeezing margins.

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Looking ahead, he expects broadly flat sequential earnings in 3QFY27, followed by a weaker fourth quarter as oil prices moderate and natural-gas costs rise. He retained his FY27 earnings forecast but cut FY28–FY29 estimates by 4.9% and 8.9%, respectively, reflecting higher minimum wages and revised exchange-rate assumptions.

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In contrast, CGS International analysts William Wo Chen Weng and Prem Jearajasingam upgraded Hartalega to “Hold” from “Reduce” following its 9% share-price decline on November 12, raising their target price to RM1.13 from RM1.00.

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They believe pressure from higher-cost inventories is largely easing, while improving sales volumes and plant upgrades should support gradual earnings recovery. However, higher natural-gas tariffs could constrain margins if costs cannot be fully passed on, and they consider much of the anticipated recovery already reflected in valuations.

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As of 9:20 a.m. on November 13, Hartalega Holdings’s share price rose 0.9% to RM1.07.

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Disclaimer: All content is AI-aggregated from public sources for informational and educational purposes only. StockTipRatings.com does not constitute investment advice. Past performance and historical statistics are no guarantee of future returns.

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