KUALA LUMPUR (Nov 8): CIMB IB Research has upgraded Hartalega Holdings Bhd to “Add” at RM8 with a higher target price (TP) of RM9 (from RM7.06) and said it deems Hartalega’s 1HFY18’s core net profit of RM203.1 million (59.4% y-o-y) as above expectations, at 52.3% of house and 50.9% of consensus’ FY18F.

In a note Nov 7, the research house said it expects a stronger 2HFY18F.

CIMB Research said Hartalega’s 2QFY3/18’s core net profit grew by 23.3% q-o-q thanks to higher sales volume (5.2% q-o-q) and better overall economies of scale.

It said an interim dividend of 3.5 sen was declared in 2QFY18, in line with house estimates.

“We expect a stronger performance sequentially in 2HFY18F in tandem with incoming new capacity and robust global glove demand.

“Upgrade to Add from Hold, with a higher TP of RM9.00 (27x CY19F P/E, based on +1 s.d. above its historical 5-year mean). Our FY18-20F EPS is raised by 12.6-15.0%,” it said.