Record earn­ings for Har­talega in first quar­ter

But its shares suc­cumb to profit taking

The Star Malaysia - StarBiz - - News - By DANIEL KHOO danielkhoo@thes­tar.com.my

PETALING JAYA: Profit-taking shaved off some gains from Har­talega Hold­ings Bhd’s shares as in­vestors took the op­por­tu­nity to sell into strength even as the com­pany an­nounced a record per­for­mance for its first quar­ter pe­riod ended June 30.

Har­talega, the big­gest ni­trile glove maker in the world by mar­ket cap­i­tal­i­sa­tion, saw its shares fall by 56 sen to RM19.94 at its close yes­ter­day.

It was the only odd one out among the other glove­mak­ers, as it topped the losers list while the rest of the other glove mak­ers made it to the top gain­ers list.

Mar­ket ob­servers and a fund man­ager said the price ac­tion re­flected some sort of profit-taking as the com­pany’s shares had risen a lot since the Covid-19 pan­demic started.

CGS-CIMB Re­search an­a­lyst Wal­ter Aw who cov­ers the com­pany con­curred, say­ing that it ap­peared to be profit-taking by in­vestors.

“I am still go­ing through their re­sults now but it is quite likely profit-taking ac­tiv­i­ties,” Aw told Star­biz.

The com­pany an­nounced its re­sults yes­ter­day which showed net profit ris­ing by more than two fold year-on-year (y-o-y) to Rm219.72mil from Rm94.06mil in the same quar­ter a year ago.

Such a rise in the com­pany’s earn­ings had al­ready been an­tic­i­pated by the mar­ket as the out­break hap­pened in­ter­na­tion­ally since some months back.

Har­talega’s earn­ings per share (EPS) of 6.49 sen for its first quar­ter is al­ready more than the half­way mark of its EPS in the whole of fi­nan­cial year 2020 of 12.88 sen.

Rev­enue for its sec­ond quar­ter, mean­while, jumped by 43.74% y-o-y to Rm920.09mil.

Div­i­dend per share an­nounced for the quar­ter was 2.1 sen com­pared with 1.9 sen in the same quar­ter of the pre­vi­ous year.

In a state­ment, Har­talega said the strong per­for­mance was driven by im­proved rev­enue on the back of in­creased sales vol­ume and higher av­er­age sell­ing prices.

This was fur­ther sup­ported by lower raw ma­te­rial and en­ergy costs as well as its con­tin­u­ous cost op­ti­mi­sa­tion ini­tia­tives, the com­pany said.

“Mar­ket de­mand was ex­cep­tion­ally strong dur­ing the quar­ter due to the un­for­tu­nate Covid-19 pan­demic. With a new wave of cases emerg­ing in the US, Latin Amer­ica and In­dia, along with upticks in other coun­tries across the world, this surge in de­mand growth is ex­pected to con­tinue in the com­ing years,” chief ex­ec­u­tive of­fi­cer Kuan Mun Leong said.

“Due to the global short­age of gloves, av­er­age sell­ing prices are ex­pected to see up­ward re­vi­sions in the com­ing quar­ters, in line with pre­vail­ing mar­ket price.”

Mov­ing for­ward, Kuan said the glove man­u­fac­tur­ing sec­tor is ex­pected to un­dergo a struc­tural step-up in de­mand on the back of in­creased glove us­age from emerg­ing mar­kets, with low glove con­sump­tion per capita as well as height­ened aware­ness of hy­giene mat­ters.

“As a re­sult, over­all pro­jected de­mand growth is ex­pected to out­strip sup­ply for the next two to three years,” Kuan said.

Har­talega said it would con­tinue to ramp up ca­pac­ity ex­pan­sion plans through its Next Gen­er­a­tion In­te­grated Glove Man­u­fac­tur­ing Com­plex (NGC).

For Plant 6 of the NGC, eight out of 12 pro­duc­tion lines have been com­mis­sioned, while for Plant 7, the first pro­duc­tion line is on track for com­ple­tion by Oc­to­ber 2020, it said.

All re­main­ing ex­am­i­na­tion glove pro­duc­tion lines for Plant 7 are tar­geted to be com­pleted by March 2021, it added.

“Mean­while, for our next ex­pan­sion phase of NGC 2.0, we aim to com­mis­sion the first pro­duc­tion line in the first half of 2022. The NGC 2.0 fa­cil­ity will pro­vide an an­nual in­stalled ca­pac­ity of 32 bil­lion pieces once com­pleted,” Kuan said.

“With th­ese plans in the pipeline, it will en­able Har­talega to con­tinue de­liv­er­ing gloves to front­lin­ers across the globe with­out dis­rup­tion, in ad­di­tion to en­sur­ing that we are well-equipped to cater to fu­ture de­mand growth,” Kuan added.

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