(SELL/Target: RM6.09)

Despite flattish sequential sales growth, Hartalega’s topline grew 4.1% qoq, boosted largely by a stronger US dollar, while its EBIT margin expanded 0.5ppt thanks to softer raw material input costs. However, we think the current rich valuations, in our view, had largely priced in these near-term positive catalysts. Maintain SELL with a higher target price of RM6.09, derived after we raised our target PE to 17x 2016F (from 14x earlier).

Source: UOB Kay Hian Research - 11 Feb 2015