On Tuesday, Nomura/Instinet upgraded Hartalega (HART:MK) (OTC: HHBHF) stock, a leading rubber glove manufacturer, from Neutral to Buy. The firm also increased the price target for Hartalega to MYR3.11 from the previous MYR2.88. The upgrade comes in response to the United States' decision to impose higher tariffs on medical gloves imported from China, which is expected to benefit Malaysian glove manufacturers like Hartalega.
The US Trade Representative (USTR) recently announced the final modifications to the tariffs on goods from China, which include a substantial increase in duties on medical gloves. Starting in 2025, the tariffs will rise to 50% and double to 100% in 2026. This marks a significant increase from the president's initial directive, which called for a minimum of 25% tariffs by 2026.
The tariff hike is anticipated to positively impact the competitive landscape for rubber glove manufacturers, particularly those based in Malaysia. Hartalega is expected to be among the companies that will benefit from this change, as the increased tariffs may lead to a surge in orders from US customers. The higher costs of gloves imported from China could make them prohibitively expensive, giving Hartalega an advantage in the market.
Nomura/Instinet's analysis suggests that Hartalega could see a near-term spike in orders due to these tariff changes. The firm believes that the earlier and higher-than-expected implementation of tariffs will reshape the competitive dynamics in favor of Malaysian glove producers over their Chinese counterparts.
The USTR's decision is part of a broader review of tariffs on goods from China, reflecting ongoing trade tensions between the two countries. Hartalega, as a Malaysian manufacturer, stands to gain as its products become more attractive to US buyers seeking alternatives to Chinese-made gloves due to the increased duties.
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