In the past, we analysed Hartalega on the following key points:
- AMG Antimicrobial gloves patented by Hartalega. Hartalega is the only glove producer in the world that is able to produce AMG Antimicrobial gloves in a mass scale.
- Founding shareholders acquisition
- Superior margin ahead of its peers and largest presence in the US
Invetors must remember:
1. Hartalega's Antimicrobial gloves and Nitrile gloves is sold directly to large and reputable medical distributors and customers. This sets them apart from their peers (T and S) that sells to a diverse base of customers where ASP can fluctuate very high to very low.
2. Hartalega's is presently the world's largest high quality Nitrile glove producer. Their main gloves are Antimicrobial and Nitrile glove (more than 97%). As comparison, T is 46% Nitrile: 54% Latex and others.
3. Smaller glove players like C will lose out in ASP and production eventually because they have no i) economies of scale, ii) pricing power, iii) strong customer base
4. Hartalega has a superior margin ahead of its peers. It's peers 1% ASP increase may result in 5% net profit increase, but for Harta, 1% ASP increase may result in 15%-20% net profit increase due to:
i) State of the art production plants that is highly automated
ii) Energy saving (biomass) renerating production plant
5. Hartalega will not lose out in a ASP war because:
i) AMG Antimicrobial glove that kills 99.999% bacteria can only be produced by Hartalega (no company in the world can produce this glove, Harta spent 6 years developing this unprecedented technological glove with UK based scientific companies)
ii) Nitrile glove - Lowest production cost among peers, highest quality among peers
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