Hartalega Holdings Berhad (Harta) released its third quarter earnings result for FY2025. With the current turnaround, does it mean that glove industry is on recovery and having brighter future prospects? Let us take a look at a few points worth for us to take note.
Q3FY2025 Earnings Results
YoY Q3 Comparison (FY2025 vs FY2024)
Revenue skyrocketed RM322.55 million (+77.6%) from RM415.64 million (Q3FY24) to RM738.19 million (Q3FY25), fueled by a massive 73% jump in sales volume. On the profit side, PBT climbed RM7.58 million (+26.1%) YoY to RM36.62 million, thanks to higher non-operating income, favorable forex gains, and the reversal of certain provisions.
For the nine months ended 31 Dec 2024 (9MFY25), the Group achieved RM2 billion in revenue, a solid RM666 million (+51%) jump YoY, fueled by a 53% surge in sales volume. Operating profit return to the black at RM44 million (vs. a RM11 million loss in 9MFY24), while PBT climbed 53% to RM30 million (from RM20 million). The strong profit rebound was driven by robust revenue growth and improved production efficiency, though partially offset by lower other operating income and forex headwinds.
QoQ Comparison (Q3FY2025 vs Q2FY2025)
Revenue for the quarter jumped by RM86 million, marking a solid 13.2% growth from Q2FY25, thanks to higher sales volume and ASP. Higher revenue contributed straight to the bottom line, with PBT surging RM84 million (+177.2%) quarter-on-quarter! The key drivers are stronger revenue, lower raw material costs, and better production efficiency as plant utilization ramped up.
Future Prospects
Based on the management’s commentary on prospects in the quarter report, the rubber glove industry entered 2025 with optimism as demand recovers from the post-pandemic downturn, aided by capacity cuts and restocking in key markets.
The higher U.S. tariffs on Chinese imports (Jan 2025) could benefit Malaysian manufacturers, but challenges remain — global oversupply, intense pricing pressure, and shipping constraints due to geopolitical unrest. Short-term demand may also soften due to U.S. front-loading in late 2024.
Looking into deeper, the management expects a 13% – 19% drop in sales volume in Q4FY2025 from Q3FY2025. Moreover, for 4QFY25, utilization is guided lower at 70–75% (vs. 86% in Q3FY2025). The QoQ decline in sales volume is mainly due to frontloaded purchases by U.S. clients, leading to excess inventory that will only clear by April – May 2025, with the expectation of U.S. demand back to normal starting Q1FY2026.
Aside, the ASP and the cost of raw materials of current quarter (Q3FY2025) likely to be extended and maintain through the next quarter (Q4FY2025). We also be noted that rapid capacity expansion & lower ASP by Chinese glovemakers may negatively affect the Harta’s sales volume.
Stock Chart
Harta’s share price has been on a short-to-medium-term uptrend, bouncing back from its low in September 2024. However, after hitting RM4, it began to retrace and shift into a downtrend. The stock saw a sharp 23% drop on 18/2/2025, largely due to unfavorable future prospects for the glove market, dampening positive sentiment.
*Share price as at 18/2/2025 Closing*
Consensus Estimate
Based on the consensus estimate (Based on share price as at 18/2/2025), the mean target price of Harta is RM 3.78, more than 43% of upside potential, with 19 number of ratings in total. However, this value need to be reviewed after today’s Harta earning results and closing price at RM 2.61 (A big drop after earning released). Consensus estimate allows investors to access the analysts’ target price to assist on the individual stock fair price analysis and investment decision.
Conclusion
Harta’s Q3FY2025 results signal a strong turnaround, with impressive revenue and profit growth driven by higher sales volume and improved efficiency. However, near-term challenges remain, as management anticipates a decline in sales volume and utilization rates in Q4FY2025 due to frontloaded orders from U.S. buyers. While the long-term outlook for the glove industry appears more stable with demand recovery and potential benefits from U.S. tariffs on Chinese imports, however, oversupply and pricing pressure continue to pose risks.
We should also note that rapid capacity expansion and lower ASP by Chinese glovemakers may negatively affect Harta’s sales volume, intensifying competition in the sector. The sharp drop in Harta’s share price post-earnings reflects market concerns over these uncertainties, making it crucial for investors to assess whether the current valuation presents a buying opportunity or if further downside risks persist.