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Wednesday, May 25, 2016

Harbour: Earnings Stayed Healthy

Result Update

For QE31/3/2016, Harbour's net profit increased by 5% q-o-q or 24% y-o-y to RM15.3 million while its revenue increased by 33% q-o-q or 44% y-o-y to RM182 million. Revenue & profits increased q-o-q due mainly to higher revenue & profits from the property development segment.

The current property development project undertaken by Harbour is known as the Kidurong Gateway. It is being carried out by a 51%-owned subsidiary, Arcadia Properties Sdn Bhd. Kidurong Gateway will be developed in the commercial hub of the Bintulu industrial area. The development will be divided into 4 phases covering 125.5 acres. Todate only 2 phases (covering only 22.2 acres) had been launched. The response has been encouraging.


Table 1: Harbour's last 8 quarterly results


Diagram: Harbour's segmental results for 9-month ended 31/3/2016 & 31/3/2015


Chart 1: Harbour's last 35 quarterly results

Valuation

Harbour (closed at RM1.08 yesterday) is now trading at a PE of 4 times (based on last 4 quarters' EPS of 26.02 sen). At this PER, Harbour is deemed attractively  valued. 

Technical Outlook

Harbour has been in a gradual uptrend since 2007. That uptrend accelerated in 2014 after its quarterly net profit broke above the RM10 million mark for the first time in QE30/6/2014. Since then, it has two big moves (in early 2014 & early 2015) which were followed by a long period of consolidation. We are now in the 2nd consolidation. While the stock is now trading below the tentative uptrend line at RM1.20, the share price may be supported by the 20-month EMA line at RM1.07-1.08. f the 20-m EMA line is breached, the share price may slide to the RM1.00 psychological level. 


Chart 2: Harbour's monthly chart as at May 24, 2016 (Source: Share Investor)

Conclusion

Based on good financial performance and attractive valuation, I would maintain my rating for Harbour as a BUY. The only concern now is technical; the breakdown of the tentative uptrend line but that's offset by possible support from the 20-m EMA line.

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, Harbour.

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