足球分析（www.99cx.vip）:Hartalega slows capacity expansion amid challenges
KUALA LUMPUR: The outlook on Hartalega Holdings Bhd is growing more challenging as its utilisation rate continues to decline and average selling price (ASP) weakness persists.
Hong Leong Investment Bank (HLIB) Research said in a note that the group's current utilisation hovers at 50% to 60% in line with industry peers while ASPs are expected to persist at a low-US$20 level per thousand gloves in the near term.
"Separately, NGC1.5 that was previously scheduled for commissioning in October 2022 has also been further postponed and expansion plans are only expected to be revived when market situation improves.
"Hartalega has also decommissioned some of its older plants to reduce its overall installed capacity and operating cost," said the research firm.
HLIB cautioned that Hartalega could be at risk of being removed from the KLCI at the upcoming FTSE Bursa Malaysia KLCI semi-annual review should its share price deteriorate further as it currently ranks at the 35th spot.,
"According to the index ground rules, constituents could potentially be removed from the index if it falls below the 35th spot. A selldown might be triggered if the constituent change materialises," it said.
The research firm trimmed its FY23-24 earnings forecast by 18% to 24% after lowering the utilisation rate to 63% and 73%.
It maintained its "sell" call on Hartalega after lowering its target price to RM1.92.
Meanwhile, MIDF Research, which has a "neutral" call on Hartalega, also reiterated pricing and margin compression in FY23.
However, it said its solid balance sheet, which makes up 25.6% of its market capitalisation in net cash, could provide a cushion against market volatility.
MIDF lowered its target price to RM2.58 after slashing its earnings estimates for FY23 and FY24.