Quick take: Hartalega shares fall marginally on lower earnings

  • Business
  • Wednesday, 08 May 2019

KUALA LUMPUR: Hartalega Holdings Bhd shares fell 1.6% in early trade Wednesday after posting fourth quarter earnings that missed expectations.

The world’s largest nitrile glove manufacturer fell 1.58%, or eight sen to RM4.97 with over 1.5 million shares done.

Harta-C22 shed 14.29% to six sen, Harta-C23 fell 5% to 19 sen while Harta-C25 declined 10.34% to 13 sen.

Hartalega posted a lower net profit in the last quarter ended March 31, as the stronger ringgit reduced its margin.

Net profit in the fourth quarter fell 21.7% to RM91.4mil compared with RM116.6mil made a year ago.

This is the third consecutive quarters of declining profit for the group.

Revenue increased to RM683.9mil from RM616.8mil previously.

For the full year, the company made a net profit of RM456.2mil, or 13.7 sen a share.

The group has declared a third interim dividend of 1.9 sen a share to entitled shareholders as of June 12, to be paid on June 27.

MIDF Research said Hartalega’s 4QFY19 earnings that came in at RM91.4mil lagged its expectation.

“This bring its full year FY19 earnings to RM456.2mil which lagged ours but met consensus expectations, representing 90.0% and 96.2% of full year FY19 earnings forecasts respectively.

“On a sequential basis, 4QFY19 revenue declined by 5.5% quarter-on-quarter (qoq), whilst earnings eased by 23.7% qoq,” MIDF said.

The research house is revising its FY20F earnings downward by RM139.3mil to RM514.9mil due to the downward pressure on average selling price as the higher costs cannot be fully pass on to customers and the expectancy of slow take-up rate of new capacity in the near term.

“We revised our target price to RM4.65 per share (previously RM5.34). Our target price is derived via pegging our FY20F EPS of 15.0sen to PER20 of 31.0x, which is its three-year average historical PER,” MIDF said, adding that it has maintained a “neutral” call on Hartalega.

Hartalega , nitrile , gloves


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