HARTA ( present price 5.28)-----OUTPERFORM BY CIMB

Set to top expectations; maintain OUTPERFORM. Hartalega is scheduled to release its 2QFY3/10 results on 10 Nov. If the recent results posted by other gloveplayers such as Top Glove (TOPG MK, Outperform), Supermax (SUCB MK,Outperform) and Latexx Partners (LTX MK, Outperform) are anything to go by, thereis a high chance of similarly strong results from Hartalega. Annualised 1H10 earningsare likely to exceed our full-year estimate of RM108.1m by about 10%, largelybecause of stronger-than-expected sales, especially from the nitrile segment. Pendingthe release of the results, we make no change to our earnings forecasts. However, aswe are now in the final quarter of 2009, we roll forward our target price to end-10 whileretaining our valuation basis of 13.5x P/E, based on an unchanged 10% discount toTop Glove’s 15x target P/E. This lifts our target price from RM7.32 to RM9.62. In viewof the favourable outlook for the company, we maintain our OUTPERFORM call.Potential re-rating catalysts include its improving quarterly earnings, coming in fromhigher demand and ongoing capacity expansion
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