KUALA LUMPUR: Hartalega Holdings Bhd recorded strong earnings in the first half of the financial year but even that has proved disappointing given the anticipated implementation of the government's one-off special "prosperity" tax and declining glove average selling prices (ASP).

       TA Securities Research said the glove maker's 315% increase in net profit year-on-year (y-o-y) to RM3.17bil came to 75.2% of its full-year forecast and 82.4% of that of consensus.

       However, it deemed the result below estimates due to the impact of the impact of the prosperity tax and expectations of further normalisation in ASP.

       "We expect the utilisation rates to pick up in the coming months and improve to circa-77% levels in 1Q22, while ASP is expected to normalise by 1Q22.

       "Based on channel checks, the glove ASP is at around USD30-35 per 1000 currently," it said in a Wednesday note.

       Separately, the research firm expects the additional prosperity tax to increase Hartalega's contribution to the government by about RM400mil in FY22.

       "We reduce our FY22/FY23/FY24 earnings by 25.5%/41.7%/18.0% after reducing our sales volumes by circa-8% and ASP assumptions by 2.8%.

       "Note that our FY22/FY23/FY24 ASP is at USD58.2/26.9/25.5 per 1,000 gloves," it said.

       The research firm maintained its "buy" call on Hartalega with an unchanged target price of RM6.59.

       Kenanga Research also lowered its FY22 forecast net profit by 4% after imputing a higher effective tax rate of 26% compared to 22% previously, after taking into account the prosperity tax.

       It reiterated "outperform" but slightly reduced its target price to RM8.70 from RM8.85 previously.

       However, it said disappointments in subsequent quarters are expected to be capped as ASPs are no longer lofty.