Quick take: Hartalega shares up 2% on Q3 results

KUALA LUMPUR: Shares of Hartalega Holdings Bhd rose over 2% in early trade Wednesday after the company posted a marginal 1.27% increase in its latest quarterly net profit.

The glove maker advanced 2.17%, or 13 sen to RM6.13, highest in about two weeks, making it the top gainer on Bursa Malaysia.

Hartalega posted a net profit of RM121.27mil for its third quarter ended Dec 31, a 1.3% increase over RM119.76mil seen in the previous corresponding quarter, due to higher sales volume.

The increase in sales also saw the group’s revenue go up 10.1% to RM796.56mil, from RM723.39mil at the same time last year.

The group has proposed to declare an interim dividend of 1.8 sen per share.

For the nine-month period, the group registered a 12.5% decline in net profit to RM319.2mil, from RM364.84mil, while revenue rose marginally to RM2.15bil from RM2.14bil previously.

Affin Hwang Capital Research said Hartalega’s results came in within both the house and consensus expectation, delivering 74% and 71% of FY20 forecast respectively.

“Although Ebitda margin per glove remained flat qoq, overall sales volume continued to grow in 3QFY20 (by 13% qoq), spurred by stronger demand from the US market.

“As utilisation rate for the quarter has risen to 96%, we believe that Hartalega would have the flexibility to increase selling price to meet the recent surge in demand, ” it said.

“As such, we raise our target price to RM6.40 on the back of an earnings upgrade of 0.2%-3.5% over the next three years, but keep our hold call unchanged, ” Affin said.

Source: TheStar