Thursday, July 7, 2011

CIMB Research retains Hartalega TP at RM7.18

KUALA LUMPUR: CIMB Research expects Hartalega to report a 1QFY3/12 net profit of RM45 million to RM50 million early next month.

It said on Thursday, July 7 that at 23%-25% of its full-year estimate, it would be in line with expectations.

'We retain our forecasts and target price of RM7.18, which we continue to base on a forward P/E of 11.75 times, a 10% discount to Top Glove's forward P/E target of 13.05 times,' it said.

CIMB Research said Hartalega is eyeing Brazil as a source of earnings growth and expects to make its first shipment of natural rubber (NR) gloves by year-end.

The glove maker is positioning itself for a change in regulations in Brazil that will allow hospitals to use nitrile gloves, which is Hartalega's specialty.

'Strong sales to Brazil could be a re-rating catalyst, along with an earlier-than-expected commissioning of Plant 6 and lower input costs. The stock remains an OUTPERFORM,' it said.

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