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Wednesday, August 09, 2017

Harta: Earning Growth Continued

Result Update

For QE30/6/2017, Harta's net profit rose 8% q-o-q or 72% y-o-y to RM96 million while revenue rose 14% q-o-q or 50% y-o-y to RM601 million. Revenue rose q-o-q due to increase in sales volume and average selling price. Profit before tax dropped 2.3% q-o-q mainly due to higher upkeep cost, depreciation expense, packaging material cost, chemical cost and term loan interest expense.


 Table: Harta's last 8 quarterly results


Graph: Harta's last 39 quarterly results

Valuation

Harta (closed at RM7.15 yesterday) is trading at a trailing PER of 36 times (based on last 4 quarters' EPS of 19.68 sen). At this PER, Harta is overvalued.

Technical Outlook

Harta is in a long-term uptrend line, with strong support at the 20-month EMA line at RM5.00. Harta needs to consolidate its recent gain and/or wait for its profit to grow further before the uptrend can continue.


Chart: Harta's monthly chart as at Aug 8, 2017 (Source: shareinvestor.com)

Conclusion

Based on improved operating performance, strong leadership in the rubber glove sector & capable management team, Harta is considered a good stock for long-term investment. Its rating is kept at HOLD due to its demanding valuation.

Note:
I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision.

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