KUALA LUMPUR (Sept 4): With Hartalega Holdings Bhd shares down 31.66% from their all-time high reached at end-July, fund managers are sensing that a buying opportunity might be afoot should the glove giant fall further.

Hartalega led the charge down yesterday among the Big Four rubber glove makers on Bursa Malaysia, finishing the day RM1.50 or 9.77% lower at RM13.86. It was the day’s second biggest loser on the bourse. The counter saw 15.92 million shares traded.

The fall in Hartalega’s share price has not only taken it further away from its record high of RM20.80 achieved on July 30, but also from the target price (TP) for the stock set by analysts.

According to Bloomberg, Hartalega’s consensus 12-month TP is RM22.61 — 63.1% higher from yesterday’s closing price. The price gap is even more striking when compared with some TPs that are at the higher end of the scale. AffinHwang Capital, for one, has a TP of RM28.80, while Kenanga has set it at RM26.22.

Hartalega is now cheaper than competitors Kossan Rubber Industries Bhd (down 7.41% or RM1.12 to RM14 yesterday) and Supermax Corp Bhd (down 5.14% or RM1.10 to RM20.30), who were the third and fourth biggest losers on Bursa, respectively, yesterday.

Hartalega, however, is still higher than Top Glove Corp Bhd, which closed 3.68% or 32 sen lower at RM8.69 yesterday.

Fund managers contacted by The Edge said should Hartalega decline further, a buying opportunity could emerge.

“We believe so [that a buying opportunity is on the cards]. The price is more attractive now. However, this would also depend on their results, which we believe should be very good, with the same going for the others [glove counters],” said one fund manager, speaking on condition of anonymity.

LeInves PLT chief investment officer William Ng concurred, but stressed the need to look at the overall market environment. In particular, he said many people are now setting their sights on the development and distribution of a vaccine for the COVID-19 pandemic.

“One has to be selective, the Big Four are still good long-term picks due to their margins and volume vis-à-vis the other players in the market, not to mention their product quality,” said Ng.

Bloomberg data indicates that Hartalega has price to earnings (P/E) ratio of 83.44 times. Year to date, it has surged by 152.92%.

For the first quarter ended June 30, 2020, Hartalega's profit jumped 134% to a record RM219.72 million, from RM94.06 million a year earlier on the back of higher average selling prices. Quarterly revenue swelled to RM920.09 million from RM640.1 million.

At its current value, Hartalega has a market capitalisation of RM47.51 billion.