FIGURE 1: HLT GLOBAL
BERHAD LAST 2 YEARS SHARE PRICE TREND
**analysis
based on 2019 annual report.
1. GENERAL
INTRO: HLT’s core business is in the fabrication of glove-dipping lines for
rubber glove manufacturing companies. It supplies glove-dipping lines in
Malaysia, Indonesia, Thailand, China, and India. It is also involved in the
manufacturing of rubber gloves.
2.
NOTABLE
POINTS:
a. HTL's rubber glove products include natural
rubber gloves such as powdered and powder-free latex examination gloves, and
synthetic rubber gloves such as powdered and powder-free nitrile examination
gloves. Currently, HLT operates 16 glove-dipping lines in its manufacturing
plant at Kuala Pilah and with a total production capacity of approximately 1.1
billion pieces of gloves. Its products have been sold within Malaysia, and to
other countries such as Taiwan, United States of America, Spain, Singapore, New
Zealand, China and United Kingdom.
b. HLT's glove-dipping lines segment made up 37% of
its revenue, while rubber gloves segment made up the remaining 63%. However, the
glove-dipping lines segment is more profitable, this segment makes up 91% of
the total gross profit, while the rubber gloves segment only makes up 9%.
c. For FY2019, HLT reported a profit after taxation
of RM4.01 million as compared to loss after taxation of RM26.07 million in
FY2018. The better performance in the FY2019 was mainly attributed by
Glove-Dipping Lines segment whilst the significant loss reported for the FY2018
was attributed by the compensation claim from a foreign customer relating to
the performance of the glove-dipping lines manufactured, impairment loss on
trade receivables and on contract assets.
d. The prospect for growth in the glove-dipping
line industry in Malaysia are positive as the industry is expected to continue
being driven by the growth in demand for rubber gloves globally as well as
domestically. As a manufacturer closely related to the gloves industry, HLT
shows potential to gain from the growing domestic and international demand.
3.
IS
THIS COUNTER A STRONG GROWTH STOCK?
a. REVENUE RANGE (RM million): 144.4 million as reported
in 2019 annual report, this is a low revenue company.
b. SHARE PRICE: from 2016-2021, share price surged
from around RM0.20 to a peak of more than RM3.00 at the start of the COVID-19
pandemic and then subsequently dropped back to current level of around RM1.10.
This share price trend is similar to most of other gloves manufacturing
counters, which experienced a surge of share price in tandem with the onset of
the COVID-19 pandemic. The share prices have since reduced but still at a
higher level compared to pre-pandemic share prices. This shows that investors
are overall optimistic on the outlook of this counter.
c. EARNING PER SHARE (EPS): earning per share in
last 5 years was overall fluctuating, which ranged from -5.56 to 5.41 sen,
whereby it made losses in 2 out of last 5 years.
d. PRICE TO EARNINGS (P/E) RATIO: current P/E ratio
is at 89.82, which shows that HLT’s share price is significantly overvalued
compared to its earnings. The overvaluation may have stemmed from investors
being optimistic about HLT’s future earning potential as a glove-dipping lines
supplier to gloves manufacturers.
e.
FUTURE POTENTIAL/PROSPECTS: share price expect
to be stable in the next few years.
f. CAPITAL EXPENDITURE (CAPEX): spending on
purchase of new fixed assets and other investments amount to about RM 1.82
million, which is around 1.5% of total assets. This shows that HLT is not
currently undergoing significant expansion of its manufacturing capacity.
4.
IS
THIS A STRONG DIVIDEND STOCK?
a. DIVIDEND YIELD: in 2019 financial year, HLT did
not declare a dividend payout to its shareholders.
b. DIVIDEND PAYOUT RATIO: N/A
c. CONSISTENCY: This counter’s dividend payout has
been inconsistent (dividend paid to shareholders in 1 out of 5 years), the dividend
paid to shareholders in the last five years ranged from 0 to 1 sen per share.
5.
IS
THE MANAGEMENT PERFORMANCE GOOD?
a. RETURN ON EQUITY (ROE): in 2019 financial year, HLT
reported a poor return of shareholders’ equity, at 5.38%.
b.
COST-TO-INCOME RATIO: the cost-to-income ratio
is 4025%, which is very high.
c. DEBT-TO-EQUITY (GEARING) RATIO: Its gearing
ratio is at 60%, whereby its debt level is less than its equity, resulting in
a healthy balance sheet.
d.
CASH FLOW: cash flow is positive, at around RM
21.45 million, equivalent to RM 0.04 per share.
6.
OTHER
INDICATORS:
a. SUPPORT BY INSTITUTIONAL INVESTORS: this counter
is not well supported by institutional investors, there are only 3 institutional
investors at top 30 major shareholders list, not including investment funds and
insurance funds. Its major shareholders are Wong Kok Wah (27.34%), Chan Yoke
Chun (27.38%) and Suntel International Co., Ltd (13.77%).
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