Hartalega

We are expecting the Group to maintain its net profit margin at around 20% despite bracing for headwinds of lower average selling prices (ASP) of gloves.


Earnings outlook/Revision

We lowered our earnings forecast for FY15F by 7% to factor in the lower average selling prices (ASP) of gloves as we expect that the increased competition in the nitrile gloves industry would keep selling prices subdued.

Double-digit earnings growth in FY16F. Earnings forecast for FY16F was nudged marginally higher by 1.5% as we update the installed production capacity figures for FY16. We are expecting FY16F earnings to grow by double-digit on the back of significant earnings contribution from NGC.


Valuation & Recommendation 

Maintain HOLD with a slightly higher target price of  RM7.00 (previous target price: RM6.98), following our upward revision of earnings for FY16F. We derive our target price by pegging FY16 EPS at PER of 16 times.

While we remain convinced on its growth prospect that underpinned by its expansion ahead, we still wary over the stiff competition in the nitrile gloves industry. Yet, we reckon that the high operational efficiency of the Group would aid to mitigate the adverse effect of lower ASP of gloves. Overall, we maintain our neutral view on the company.

JFApex Securities 30.9.2014

HARTA Quarter Report History

No.	Financial		Revenue		Profit Before		Net Profit		EPS	Div	NTA
	Quarter		(RM,000)		Tax (RM,000)		(RM,000)		(Cent)	(Cent)	(RM)	PBTM
1	30/06/2014		279,198		75,651		57,087		7.55	4	1.34	27.1%
4	31/03/2014		280,373		70,272		49,157		6.63	3.5	1.27	25.1%
3	31/12/2013		267,820		74,673		57,876		7.81	3.5	1.23	27.9%
2	30/09/2013		280,953		82,300		63,273		8.55	3.5	1.18	29.3%
1	30/06/2013		278,014		81,917		62,912		8.56	4	1.1	29.5%
4	31/03/2013		269,772		81,318		62,293		8.52	3.5	1.05	30.1%
3	31/12/2012		259,565		78,368		60,529		8.28	3.5	0.99	30.2%
2	30/09/2012		255,019		76,282		58,597		8.01	3.5	0.94	29.9%
1	30/06/2012		247,678		69,914		53,358		7.3	0	0.9	28.2%
4	31/03/2012		240,217		64,460		50,012		13.73	6	1.7	26.8%
3	31/12/2011		241,951		63,902		50,703		13.93	6	1.61	26.4%
2	30/09/2011		229,542		59,551		46,127		12.68	6	1.53	25.9%