Results in line. 9MFY12 core net profit of RM160m (+18% YoY) made up 77% of our and consensus full-year forecasts. Despite the 36% rise in its share price YTD, Hartalega's current 11x CY13 PER is still at a steep discount to less profitable Top Glove's 18x. The company has also declared a 1-for-1 bonus and 1-for-5 free warrants issue. With the resulting expected boost in trading liquidity, we believe the valuation gap between Hartalega and Top Glove will narrow. Hence, we raise our TP to RM9.20 (+8%) on a target CY13 PER of 13x (12x previously).

Maybank Research 23 Feb 2012

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