TA Securities trims earnings forecasts, target prices for Hartalega, Top Glove, Supermax amid higher
KUALA LUMPUR (April 26): TA Securities Holdings Bhd has trimmed its earnings projection for rubber glove companies Hartalega Holdings Bhd, Top Glove Corp Bhd and Supermax Corp Bhd due to the higher minimum wage of RM1,500.
“We trim Hartalega, Top Glove and Supermax’s FY22/FY23/FY24 earnings forecasts by 0.0%/3.6%/3.4%, 3.2%/3.9%/3.7% and 0.7%/4.6%/4.7% respectively after factoring in the higher minimum wage,” said TA Securities analyst Tan Kong Jin in a client note on Tuesday (April 26).
The research house has also lowered its target prices (TPs) for the three stocks. It has maintained its "buy" recommendation for Hartalega but trimmed the stock’s TP to RM5.62 (from RM6.02).
“We maintain 'sell' recommendations on Top Glove and Supermax with lower TPs of RM1.27 (previously RM1.32) and RM0.74 (previously RM0.77) based on CY23 PE (price-to-earnings) of 22 times and 14 times respectively,” said Tan.
At the time of writing on Tuesday, Hartalega shares were trading up 1.11% at RM4.56 with a market value of RM15.63 billion. Top Glove inched up 1.75% to RM1.74 with a market capitalisation of RM14.28 billion.
Supermax rose 1.82% or two sen to RM1.12, valuing the group at RM3.05 billion.
The research house, quoting the Malaysian Rubber Glove Manufacturers Association (MARGMA), said the higher minimum wage of RM1,500 from May 1 (from RM1,200 currently) will result in an increase in glove production costs of between 1.4% to 2.8%.
“MARGMA added that the industry itself has been paying more than RM1,500. Currently, the rubber glove industry employs circa 70,000 employees. However, the industry will need to add about 19,000 workers over the next few months to improve the labour shortage situation.
“Based on our channel checks with the glove manufacturers under our coverage, foreign workers' take-home pay is estimated to be at around RM1,500 to RM2,000 inclusive of overtime fees. Moreover, as of March 2022, we note that Top Glove and Supermax have already raised their minimum wage to RM1,400 per month,” said Tan.
With labour costs accounting for only about 10% of total production costs, TA Securities estimates that profits for the glove manufacturers under its coverage will be impacted by about 3% to 5% in 2022, assuming minimal pass-through as the industry enters the Covid-19 endemic stage.
The research house also expects the endemic transition period to last for another three quarters before glove manufacturers will be able to pass on the entire cost increase (as seen during the pre-pandemic period) as the supply or demand situation normalises.
“Separately, we believe that the dependence of rubber glove manufacturers on foreign workers will remain high at 55%-65% due to low retention rate of local workers, who prefer works in a more comfortable environment,” said Tan.
http://www.theedgemarkets.com/article/ta-securities-trims-earnings-forecasts-target-prices-hartalega-top-glove-supermax-amid
Singapore Investment
-
-
-
-
-
-
-
-
-
-
The Art of Being Patient17 hours ago
-
-
-
-
-
SBAUG25 GX25080X is 2.29%23 hours ago
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Portfolio Summary for June 20253 days ago
-
-
-
Portfolio (June 30, 2025)3 days ago
-
Portfolio (June 30, 2025)3 days ago
-
-
Portfolio Update June 20253 days ago
-
-
-
-
Month of June 20253 days ago
-
June 2025 Updates4 days ago
-
-
-
-
-
-
-
Batisht crazy!6 days ago
-
-
Will SORA crash to 1 per cent?1 week ago
-
-
Hello world!1 week ago
-
Cut back some exposure1 week ago
-
-
-
-
-
8 tips for house moving2 weeks ago
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
May 2025 Portfolio4 weeks ago
-
-
-
Thakral - Gem life deal finally coming?5 weeks ago
-
-
-
-
-
Clarity1 month ago
-
The Trump Tariffs1 month ago
-
Selling HRnet and Fiverr1 month ago
-
-
-
-
Ignore the noise and be calm2 months ago
-
-
-
-
FAQ on Quantitative Investing Part 22 months ago
-
-
-
-
Crossing the 300k Mark [in a volatile period]2 months ago
-
-
-
-
-
-
-
-
-
ETF vs Mutual Fund: Which is Better?5 months ago
-
-
-
-
-
-
Arigato Everyone! A Decade of Blogging!6 months ago
-
Top 10 Highlights of 20246 months ago
-
-
-
Union Square Residences8 months ago
-
-
-
STI ETF9 months ago
-
-
-
Unibet Casino Bonus Codes 20249 months ago
-
-
-
-
The Stigma against Early Retirement (FIRE)11 months ago
-
Monthly IBKR Update – June 202411 months ago
-
-
-
-
-
-
-
-
-
Feb 2024 Expenditure1 year ago
-
-
-
-
-
-
-
Monthly Summary of November 20231 year ago
-
Migration of website1 year ago
-
-
-
-
-
-
Hello SP Group, I'm Back!2 years ago
-
-
-
A New Light2 years ago
-
-
-
-
-
2022 Thoughts, Hello 2023!2 years ago
-
Series of Defaults for Maple Finance2 years ago
-
Takeaways from “Sea Change”2 years ago
-
Greed is Coming Back2 years ago
-
-
-
-
-
-
-
-
What is Overemployment3 years ago
-
Terra Hill Condo (former Flynn Park)3 years ago
-
Alibaba VS Tencent: The Battle Royale3 years ago
-
-
-
-
-
-
-
-
-
-
-
-
-
Home
HARTA
SUPERMX
TOPGLOV
TA Securities trims earnings forecasts, target prices for Hartalega, Top Glove, Supermax amid higher