For QE30/9/2012, Harta's net profit increased by 10% q-o-q or 26% y-o-y to RM58.6 million while revenue increased by 3% q-o-q or 11% y-o-y to RM255 million. Increased revenue is due to higher sales volume. This coupled improved profit margin (due to lower prices for raw material) led to higher bottom-line.
Table 1: Harta's last 8 quarterly results
Chart 1: Harta's last 20 quarterly results
Valuation
Harta (closed at RM4.89 yesterday) is now trading at a PE of 16 times (based on last 4 quarters' EPS of 29.14 sen). Its dividend yield is about 2.7%. At this multiple, Harta is deemed fairly valued.
Technical Outlook
Harta is now trapped in a rising wedge, with resistance at RM4.90 & support at RM4.40. A rising wedge is also called a bearish wedge as it normally breaks to the downside.Let's wait & see whether Harta will defy the conventional prediction.
Chart 2: Harta's weekly chart as at Nov 6, 2012 (Source: Quickcharts)
Conclusion
Based on satisfactory financial performance, Harta is considered a good stock for long-term investment. However, it is fairly valued and its technical outlook is unexciting unless it can break above the rising wedge at RM4.90. If that happens, the stock could be a trading BUY. Until then, its rating is a HOLD.
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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