Harta announced its results for QE30/6/2010. Its net profit dropped 10.7% q-o-q to RM41.5 million on the back of a 4%-increase in turnover to RM170 million. Compared to the previous corresponding quarter, Harta's net profit was up by 57% while turnover was up by 36%. Our concern however is on the break in the sequential rise in the bottom-line which is indicative of the rubber glove sector entering into a more difficult operating environment.
Table: Harta's last 8 quarterly results
Chart 1: Harta's last 11 quarterly results
Technical Outlook
Harta broke below its uptrend line support at RM8.00 on Monday. Unless a quick recovery happened, the technical outlook for Harta has turned bearish. (Note: As at 9.13 am, Harta was trading at RM8.01. A possible recovery?)
Chart 2: Harta's daily chart as at August 10, 2010 (Source: Quickcharts)
Conclusion
Based on the break in the sequential rise in the company's bottom-line- which was also witnessed in the recent quarterly results for Topglove & Adventa- as well as the bearish breakdown of its uptrend line, I believe Harta is likely to have peaked. As such, it is advisable to take profit on this stock.
9 comments:
hi alex,
seems like money is out from glove and tech sector. i wonder where is the money flowing to?
secondly, do you think it is advisable to subscribe to Unisem Warrant? With the recent drop in Unisem, the warrant is out of money.
thanks
maxwealth88
hi alex. i saw several poultry stocks break new high such as EMIVEST, LHH, LTKM, HUATLAI ...
for those miss these stocks, is there any other poultry stocks worth to buy now ?? such as CAB, TPC, DBE, PW, FARMBES ....\
thx alots.
Hi MaxWealth88
There is no question about it, you must subscribe for the Unisem's warrant issue. Even though it is out-of-the-money, it would still have some value. The value of any warrant comprises intrinsic value & conversion premium. In the case of Unisem's new warrant )assumed to Unisem-WA), the intrinsic value is zero (as it's out-of-the-money) but the conversion premium for a new warrant is about 10-20% of the value of the share. I won't be surprise if Unisem-WA would trade at 40-50 sen. After all, Unisem-WR traded at about 40-50 sen from August 2 to August 6.
NB. The exercise price for the warrant is RM2.18.
Hi wong
Poultry stocks are a real mix bag. A few companies are well-managed but many are not. On top of that, they are subject to the vagaries of the feed prices. As their products are price-controlled, the bottom-line can go into the red quite often. If the stocks are in the play, they would rise.
Dear Alex, can comment on PJ development?
Pjdevelopment recently have proposed 3 warrant for every 8 exiting share and warrant; the warrant will be issue at 2sen for 10year; exercise price at RM1.00. Based on current price of 72sen, what is intrinsic value for its warrant once listed in bursa sometime in Nov?
Other catalyst that i can think of are upcoming final dividend 3-5sen; and proposed listing its subsidiary: olympic-cable
Latexx has been going down although post good result. What do you think will be the support price?
Hi Lim
Latexx's next support is at RM3.30.
Hi hng
There is nothing to add to what you have written. The proposed warrant issue & the proposed listing of its subsidiary should be the catalyst for some upward movement in the share price. The one-time dividend payment, which is normally not significant (only 3% for FY2009) & paid out in January the following year, may not be too exciting.
On the new warrant to be issued, if the exercise price is above the present share price, the value would only be its conversion premium. This is about 10-20% of the share price. This, the warrant would be worth about 10 sen only.
Chartwise, PJDev has support at RM0.68-70 & its long-term downtrend line resistance at RM0.80-81.
Thanks Alex, PJ development cumulative last 3 Q result stand at EPS= 8.58sen, which was significant higher than last yr result. I'm expecting last quarter result going to be good based on its major property development: Swiss-Garden Residence already reach top of the roof in both tower and PJdev should record higher progress billing. I'm assuming PJ dev record annualized of 11 sen EPS and expect PJdeve resume previous payout of 5sen dividend.
I also assume these year the dividend will bring forward compared to last year in conjunction to expected earlier AGM. This is due to the proposed warrant would need to seek approval from shareholder in EGM before the expire date of current warrant which is due by 29 Oct and it is normal practice for listed company to have both EGM and AGM carry out on the same date
In turn of warrant, which will be issue at 2sen/warrant but with validity of 10yr much higher than usual, cum with lower exercise price of 1.00 than current exercise of 1.10. Taking into account of longer validity of warrant (time value) and lower exercise price, i'm assuming PJ dev newly warrant could carry intrinsic value of 14sen.
Remark: above all is just my prediction :)
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