Quick take: Hartalega falls despite posting record profit


KUALA LUMPUR: Hartalega Holdings Bhd posted record quarterly profit for its third quarter ended Dec 31, 2020. But the stock is trading lower Tuesday morning.

The glove maker, the top loser on Bursa Malaysia shed 2.62%, or 34 sen to RM12.62.

Hartalega’s net profit in the three months ended Dec 31 (Q3FY21) breached RM1bil for the first time ever, as revenue surged to RM2.13bil from RM796mil a year ago.

Its earnings per share was 29.3 sen a share and the company has declared an interim dividend of 9.65 sen a share.

For the nine months ended Dec 31, Hartalega has achieved higher sales revenue of RM4.40bil, an increase of RM2.25bil or 104.8% from 9MFY20.

Hartalega’s latest earnings came in above expectations.

RHB Research said Hartalega’s 9MFY21 earnings beat expectations, due to its better-than-expected ASP.

“Looking ahead, 4QFY21 is set to rise higher,asits ASP uptrend has remained intact. On top of the spectacular earnings, we like the company for its gold standard in Covid-19 prevention among workers,” it said.

“9MFY21 core net profit of RM1.77bil came up to73% of our and 69% of street full-year estimates.

“We regard this as an out performance, as we expect the ASP hike to continue in 4QFY21–in line with the uptrend in market prices of gloves,” RHB said.

It added that Hartalega’s 3QFY21 ASP of US$55.00 per box was still 50% below the current nitrile glove ASP of US$110.00-120.00 per box.

RHB has raised FY21-22F core earnings by 31% and 26% to RM3.19bil and RM4.63bil.

BIMB Securities Research said the 9MFY21 net profit of RM1.8mil made up 63% and 69% of the house and consensus full year forecast.

“We deem this to be above expectations, owing to higher-than-expected increase in ASPs which will be reflected in the upcoming quarter,” it said.

“We have revised our FY21/22 earnings forecast higher by 24%/14% as we adjusted higher our ASP assumption. Maintain ‘buy’ with a higher target price of RM16.80 based on PER 29x (Hartalega’s 5 yrs pre-covid19 historical forward mean) pegged to roll over CY22F EPS of 57.9 sen,” it added.

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Hartalega , nitrile , glove

   

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