- Import Duty amounting to RM31,452,344.00
- Excise Duty amounting to RM54,805,709.42
- Sales Tax amounting to RM5,492,365.50
When it released its latest financial results for QE31/12/2011, Harison merely referred to the above demand & made the following comments:
i) It does not admit being liable to pay RM91,750,418.99.
ii) It is seeking legal advice on the demand.
iii) It has on 27 February 2012 written to the Custom to request for a two months extension to reply to their letter.
The above comment is a standard comment which is to be expected since the matter is still pending. If this claim is not successfully challenged by Harison, it could lead to two things:
a) A full payment would reduce its Shareholders' Funds from RM268.9 million to RM177.2 million or its NTA per share from RM3.93 to RM2.59 (based on its Balance Sheet as at 31/12/2011).
b) Its future sales volume & operating margin will be affected due to higher duties and/or sales tax payable.
In my opinion, it is probable that Harison will not succeed in disputing the claim by the Custom. As such, the prudent approach is to reduce one's position in this stock. From the chart below, we can see that Harison has broken its 40-week SMA line at RM3.22 (which you may consider its uptrend line).
Chart: Harison's daily chart as at March 22, 2012_12.15pm (source: Quickcharts)