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Wednesday, February 17, 2016

Harta: Earnings increased sequentially

Result Update

For QE31/12/2015, Harta's net profit rose by 20% q-o-q or 47% y-o-y to RM73 million while revenue rose 5% q-o-q or 39% y-o-y to RM398 million. Revenue rose q-o-q  basically due to increase in demand and the strengthening of the USD. This has more than offset the impact of competitive sale pricing and led to higher PBT. PBT also benefited from net forex gain of RM707k as compared to a net forex loss of RM19.988 million in the immediate preceding quarter.


 Table: Harta's last 8 quarterly results


Chart 1: Harta's last 33 quarterly results

Valuation

Harta (closed at RM4.98 yesterday) is trading at a trailing PER of 32 times (based on last 4 quarters' EPS of 15.49 sen). At this PER, Harta is deemed over-valued.

Technical Outlook

Harta is in a long-term uptrend over the past 6 years. Its long-term uptrend is well-supported by the 21-month EMA line at RM4.50 while its intermediate uptrend is supported by the 10-month SMA line at RM4.50.


Chart 2: Harta's monthly chart as at Feb 16, 2016 (Source: Share Investor)

Conclusion

Based on strong leadership in the rubber glove sector, good financial performance & capable management team, Harta is considered a good stock for long-term investment. However, the stock deserves only a rating of SELL INTO STRENGTH due to its demanding valuation.

Note: 
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, Harta.

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