Quick take: Hartalega succumbs to selling pressure despite posting record earnings

KUALA LUMPUR: Hartalega Holdings Bhd’s shares succumbed to selling pressure in early trade Wednesday despite posting its best-ever quarterly net profit in the second quarter ended Sept 30.

The world's largest nitrile glove producer is the second top loser on Bursa Malaysia. The counter fell 1.31%, or 24 sen to RM18.04.

Hartalega’s net profit surged to RM544.96mil in the second quarter ended September 30, 2020 compared with RM103.87mil in Q2 2019.

Its revenue for the period jumped 89.7% to RM1.35bil against RM709.42mil previously on the back of higher sales volume during the quarter under review.

In the first half, its net profit rose by 286% to RM764.67mil from RM197.93mil in the previous corresponding period. Its revenue increased by 67.9% to RM2.26bil from RM1.35bil a year ago.

Kenanga Research said Hartalega’s 1HFY21 Patami of RM765mil came in at 27%/38% of the house/consensus full-year forecasts.

“We consider the results to be within expectations as impact from higher ASPs will be felt in subsequent quarters,” it said.

“The group is confident of sustained strong demand with its production capacity booked up till end CY21, reassuring us that the lagged impact from ASP hike will be felt in 2HFY21.

“Our target price is RM26.22 based on 19.7x CY21E EPS. Reiterate Outperform,” Kenanga said.

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