Result Update
For QE30/6/2018, Harta's net profit rose 7% q-o-q or 30% y-o-y to RM125 million while revenue rose 15% q-o-q or 18% y-o-y to RM706 million. Revenue increased q-o-q driven by higher sales volume which increased by 6.4% and higher average selling prices. PBT rose 8% q-o-q in line with higher sales revenue attained, lower heat cost, chemical cost, upkeep of plant & machinery and improved operational efficiency.
Table: Harta's last 8 quarterly results
Graph: Harta's last 43 quarterly results
Valuation
Harta (closed at RM6.17 yesterday) is trading at a trailing PER of 44 times (based on last 4 quarters' EPS of 14.16 sen). At this PER, Harta is deemed fully valued. However, its PEG ratio is fairly reasonable at 1.2 times based on EPS CAGR of 37% over the past 2 years.
Technical Outlook
Harta is trapped within a symmetrical triangle. If it can break to the upside of the triangle at the RM6.20, its uptrend will likely continue.
Chart 1: Harta's daily chart as at Aug 7, 2018 (Source: Shareinvestor.com)
Chart 2: Harta's weekly chart as at Aug 7, 2018 (Source: Shareinvestor.com)
Conclusion
Based on improved operating performance, strong leadership in the glove sector and 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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