Hartalega Faces Earnings Pressure, Hong Leong Cuts Rating to Sell
Hong Leong IB expects a weaker fourth quarter for Hartalega as cheaper oil and costlier gas squeeze margins; rating cut to sell, target 0.80 ringgit.
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what happened
Hong Leong IB analyst Chee Kok Siang, in a note reported by Market Talk, expects Hartalega's fiscal third-quarter earnings to be roughly flat sequentially, with a weaker fourth quarter. He points to lower Brent crude prices and higher natural gas costs as the main drags on margins.
According to him, lower oil prices could lead to selling price cuts from December. Meanwhile, the company is still using higher-cost nitrile butadiene rubber inventories bought earlier, so cost savings arrive with a delay and margins stay under pressure. Further oil weakness into the first quarter of 2027 and an expected natural gas tariff increase of about 10% could add to fourth-quarter pressure.
Hong Leong downgraded the stock to sell from hold, citing persistent structural oversupply risks, and cut its target price to 0.80 ringgit from 0.97 ringgit. The shares are unchanged at 1.06 ringgit.
why it matters
For glove makers, raw material and energy costs drive profitability, so cheaper oil that lowers rubber input costs alongside pricier gas that raises production costs shapes the margin outlook. The note concerns one company and reflects sell-side analysis.
market impact
Hartalega: margin pressure from gas costs and delayed cost savings from cheaper oil
tags
instruments
sources
- Hartalega Likely to Face Earnings Pressure — Market Talk, 13 November 2026 at 02:32 UTC
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