FIGURE 1: HARTALEGA
HOLDINGS BERHAD LAST 5 YEARS SHARE PRICE TREND
**analysis
based on 2019 annual report.
1.
GENERAL INTRO: Hartalega is one of the major
glove manufacturers in Malaysia.
2.
NOTABLE POINTS:
a. In
its 2019 annual report, Hartalega is declared as the world's largest
manufacturer of nitrile gloves.
b. Hartalega
stands out in its earning performance, whereby its earning per share more than
doubled (from 6.74 sen to 13.69 sen) within last five years.
c. At
current share price, P/E ratio is very high (44.11). Hartalega is also in
progress of increasing production capacity. It is anticipated that its earning
will increase further in the coming years. However, considering its high price
at this moment, investors may consider to hold on and wait for a lower price
point to invest in.
3.
IS THIS COUNTER A STRONG GROWTH STOCK?
a. REVENUE
RANGE (million): ~2827 million in 2019 annual report, this is a high revenue
company.
b. SHARE
PRICE: from 2015-2019, share price dropped significantly in 2015 and 2018 due
to stock splitting. Most of the time share price steady at around RM5
c. EARNING
PER SHARE (EPS): earning per share in last 5 years almost doubled from 6.74 to
13.69 sen, indicating a strong growth potential of this counter
d. FUTURE
POTENTIAL/PROSPECTS: quite dependable and reliable counter, share price expected
to be stable.
e. CAPITAL
EXPENDITURE (CAPEX): spending on purchase of new fixed assets is RM 431
million, around 14% of total assets, due to factories expansion.
4.
IS THIS A STRONG DIVIDEND STOCK?
a. DIVIDEND
YIELD: in 2019 report, Hartalega declared a total dividend payout of 8.2 sen
per share, amounts to dividend yield of 1.53 % based on current share price.
b. CONSISTENCY:
consistent dividend payout, last five years (2015-2019) dividends declared range
from 8 to 12 sen per share.
c. DIVIDEND
PAYOUT RATIO: in 2019 financial year, Hartalega paid out about 60% of its
earnings to investors in the form of dividend.
5.
IS THE MANAGEMENT PERFORMANCE GOOD?
a. RETURN
ON EQUITY (ROE): in 2019 financial year, Hartalega achieved a good return of
shareholders’ equity, at 17.33%.
b. COST-TO-INCOME
RATIO: cost-to-income ratio is quite high at about 413%, but lower than Top
Glove, which reported a cost-to-income ratio of about 1000%
6.
OTHER INDICATORS:
a. CASH
FLOW: cash flow is positive, around RM 150 million, equivalent to RM 0.04 per
share
b.
SUPPORT BY INSTITUTIONAL INVESTORS: this counter
is well supported by institutional investors, there are 21 institutional
investors at top 30 major shareholders list, including EPF (5.55%), Hartalega
Industries Sdn Bhd (48.37%), Kumpulan Wang Persaraan (3.01%) and few insurance
companies and investment funds.
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