Harta has just announced its results for QE31/12/2009. Its net profit increased by 12.4% q-o-q or 67.4% y-o-y to RM37.2 million, while turnover increased by 10.4% q-o-q or 24.8% y-o-y to RM149 million. The company attributed the continuous growth in its top-line & bottom-line to increased production capacity & demand; more efficient production process; higher premium nitrile gloves; lower input cost; and favorable exchange rate. In another word, everything worked out in its favor.
Table: Harta's last 8 quarterly results
Chart 1: Harta's 9 quarterly results
Valuation
Harta (closed at RM7.31 yesterday) is now trading at a PER of 13.8 times (based on last 4 quarters' EPS of 53 sen). At this multiple, I believe Harta's upside would be limited (say, about 10% from the current price), especially so due to the present cautious overall market sentiment. However, Harta's earning could increase and this should lead to a lowering of Harta's PER as more production lines are added in the future.
Technical Outlook
Harta is still in an uptrend, with support from either the 50-day or 100-day SMA line (at RM6.00-6.50). Since the MACD has done a negative cross-under, there is a likelihood that Harta may come under some selling pressure.
Chart 2: Harta's daily chart as at Jan 29, 2010_9.15am (Source: Quickcharts)
Conclusion
Harta still deserve a HOLD rating. A good entry level to this stock would be at RM6.00-6.50.
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