Harta: Earnings Dropped 25% Due to Lower Revenue

Result Update

For QE30/6/2019, Harta's net profit rose 3% q-o-q but dropped 25% y-o-y to RM94 million while revenue dropped 6% q-o-q or 9% y-o-y to RM640 million. Revenue dropped q-o-q mainly due to decrease in sales volume for the quarter. Profit before tax for the quarter increased by RM8.0 million or 7.0% as compared with preceding quarter mainly due to lower cost of upkeep, electricity and packaging.


 Table: Harta's last 8 quarterly results


Graph: Harta's last 47 quarterly results

Financial Position

As at 30/6/2019, Harta's financial position is deemed healthy with current ratio at 2.56x and gearing ratio at 0.31x.

Valuation

Harta (closed at RM5.05 yesterday) is trading at a trailing PER of 40 times (based on last 4 quarters' EPS of 12.58 sen). At this PER, Harta is deemed overvalued.

Technical Outlook

Harta is in an uptrend line, with support at RM4.80.


Chart 1: Harta's daily chart as at Aug 6, 2019 (Source: Malaysiastock.biz)


Chart 2: Harta's monthly chart as at Aug 6, 2019 (Source: Malaysiastock.biz)

Conclusion

Based on weaker financial performance and demanding valuation, I rate Harta as a SELL or TAKE PROFIT.

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.