Results Update
Harta's net profit increased by 4.5% q-o-q or 32.1% y-o-y to RM54.8 million while its turnover increased by 14% q-o-o or 29% y-o-y to RM219 million. The company attributed its increased top-line & bottom-line to the contribution from its plant no. 5 which has more efficient production lines as well as higher capacity. from Chart 1, we can see Harta's strong growth in its top-line & bottom-line. However, you may notice that its profit margin has slipped a bit. Is this the result of greater competition from other rubber glove producers who are now getting into the nitrile glove sector?
Table 1: Harta's last 8 quarterly results
Chart 1: Harta's top=line, bottom-line & profit margin over the last 15 quarters
Valuation
Harta (closed at RM5.51 today) is now trading at a PE of 9.8 times (based on last 4 qaurters' EPS of 56 sen). At this PE multiple, Harta is deemed attractive.
Technical Outlook
Harta is trapped within a rising wedge, with resistance at RM6.30-6.40 & support at RM5.00-5.10.
Chart 3: Harta's weekly chart as at August 8, 2011 (Source: Tradesignum)
Conclusion
Based on good financial performance & attractive valuation, Harta is still a good stock for long-term investment.
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