KUALA LUMPUR: Maybank Investment Bank Research has upgraded Hartalega to a Buy with a RM6.80 discounted cashflow-based target price.
It said on Wednesday, Jan 19 Hartalega is set to profit from the structural demand switch to nitrile gloves, at the expense of latex gloves.
Demand for nitrile gloves will continue to encroach into the latex gloves market as nitrile gloves ASP discount to latex widens (atypical in the past),' it said.
OSK Research said it had raised its FY11-13 earnings forecasts by 8-10% taking into account higher market share gain of 0.5 percentage point per annum (0.3-percentage poin previously).
At its new RM6.80 TP (+26%) post earnings upgrade and removing a 10% discount for improving prospects, Hartalega is valued at an implied 11.0 times CY12 PER versus Top Glove's 13 times.
'We think the valuation discount to Top Glove (with a negative outlook) should narrow. We reckon market will re-rate Hartalega upwards when the shifting nitrile trend take hold,' it said.
It said on Wednesday, Jan 19 Hartalega is set to profit from the structural demand switch to nitrile gloves, at the expense of latex gloves.
Demand for nitrile gloves will continue to encroach into the latex gloves market as nitrile gloves ASP discount to latex widens (atypical in the past),' it said.
OSK Research said it had raised its FY11-13 earnings forecasts by 8-10% taking into account higher market share gain of 0.5 percentage point per annum (0.3-percentage poin previously).
At its new RM6.80 TP (+26%) post earnings upgrade and removing a 10% discount for improving prospects, Hartalega is valued at an implied 11.0 times CY12 PER versus Top Glove's 13 times.
'We think the valuation discount to Top Glove (with a negative outlook) should narrow. We reckon market will re-rate Hartalega upwards when the shifting nitrile trend take hold,' it said.
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