Hartalega’s 2QFY18 earnings within expectations

KUCHING: Hartalega Holdings Bhd’s (Hartalega) second quarter of financial year 2018 (2QFY18) earnings have come in within expectations, leading to FY17-FY18 earnings forecasts to be revised upwards.

In a filing on Bursa Malaysia, Hartalega said for 2Q, the group’s profit before tax increased by RM53.5 million or 63.9 per cent to RM137.2 million compared with the corresponding quarter of previous financial year of RM83.7 million.

Hartalega’s 2QFY18 earnings of RM113.3 million was within the research arm of MIDF Amanah Investment Bank Bhd’s (MIDF Research) and consensus full-year earnings expectations at 54 per cent and 53.5 per cent respectively.

Post-earnings announcement, MIDF Research revised its FY17-18 earnings upwards by 2.3 per cent and 4.4 per cent as the research arm increased its utilisation rate assumption to 90 per cent from 88 per cent in view of more efficient utilization of capacity and growing demand going forward.

“The key risks to our earnings are the unexpectedly high operating costs and delay in its capacity expansion plans,” the research arm said.

All in, MIDF Research reiterated its ‘neutral’ recommendation on Hartalega with a revised target price of RM7.30 per share post results announcement.

“Despite the more positive outlook for Hartalega in FY18 we think the call is fair as we opine that all positives have been priced in at this juncture.

“Furthermore, its share price has rallied to a new 52-week high during past month which further limits the share price appreciation in our opinion.”