Bloomberg - HART:MK
Yahoo - 5168 .kl
Webpage - https://www.hartalega.com.my/
Yahoo - 5168 .kl
Webpage - https://www.hartalega.com.my/
Sector : Health Care
Company
Profile
HARTA start their
business in 1988, in 2018 base on Industry Comparison – Gloves it
is the second largest glove manufacturing company operate in Malaysia behind
TOPGLOV with 23.72 % Market Share base on 2018 revenue.
1) Operating Segment
HARTA business mainly
comprises manufacturing and sale of latex gloves.
2) Geographical Area
HARTA 2019 revenue base
on geometrical area of the customer are as follows:
1) North America – RM 1,528,310,615 (54.05
%)
2) Europe – RM 716,268,025 (25.33 %)
3) Asia (Excluding Malaysia) – RM 383,581,063
(13.56 %)
4) Australia – RM 93,394,444 (13.57 %)
5) South America – RM 70,026,543 (2.48 %)
6) Middle East – RM 24,191,416 (0.86 %)
7) Malaysia – RM 10,038,861 (0.36 %)
8) Russia – RM 1,407,443 (0.05 %)
3) Major Customer
In 2019, 36.32 % (RM
760,313,317) of total revenue are from one major customer is North America.
CONS:
|
è
Only 0.36 % of 2019 revenue is from
Malaysia. With Convid 19 and restriction of movement around the world might
affect the revenue of HARTA.
è
36.32 % of revenue from one customer in
North America.
|
Financial
Statement
HARTA had increased it
Property, plant and equipment (PPE) by RM RM 306,776,368 of which mostly is
transfer from construction of new
factory building and set up of new production plant and machinery. HARTA is
planning to expand production and boost adoption of industry 4.0 technology to
reduce dependency on manual workforce by 18 %. Besides that, there would be additional
of 27 production lines which would be completed in phase from 2020. (source:
New Straits Times )
Intangible asset are
mainly for IT software (65.40 %) and patent rights (33.98 %). Only RM 142,765
or 0.62 % of intangible asset is for golf club membership which shall remove
from the company asset.
HARTA trade receivable had
increase by RM 52,368,199 from 2018 to 2019. However, the trade receivable past
due had increase by RM 51,412,998.
PROS:
|
è Adoption of industry 4.0 technology to
reduce 18 % workforce
è Additional 27 production line which
completed in phase from 2020.
|
CONS:
|
è
RM 142,765 from golf club membership is
included in the intangible asset.
è
Trade receivable increment is almost
similar to increase in trade receivable past due
|
In 2019, RM 33,221,900
increase of share capital is due to exercise of options under ESOS and there is
RM 809,185,774 of retained earning. HARTA is giving ESOS to employee who is
confirmed in service and has at least 6 months of continue service within the
group. As 31 March 2019 total number of outstanding options was RM 88,788,100.
Loan and borrowing had
increase by RM 27,294,926 or 9.62 %. Besides that the interest also increase
from 1.80% - 3.41% in 2018 to 2.15% - 4.27%. Interest rate of the loan is expected
to decrease in 2020 due economy slowdown around the world. HARTA loan and
borrowing all are in term of US Dollar.
RM 75,663,240 or 71.59
% of trade payable is denominated in US dollar.
HARTA had RM 125,614,922
of deferred tax liability which mainly due to differences between the carrying
amount of property, plant, and equipment and its tax base. HARTA would not
required to pay the tax before the PPE is sold.
PROS:
|
è RM 125,614,922 of defer tax liability would
not be pay to government unless the PPE is sold.
|
CONS:
|
è
Giving ESOS to employee as of 31 March
2019 total number of outstanding options was RM 88,788,100.
è
Loans and borrowing in term of US Dollar.
è
71.59 % of trade payable is denominated
in US dollar.
|
Financial
Ratio
Description
|
2019
|
2018
|
Different
|
Gross
Profit Margin
|
25 %
|
26 %
|
-1 %
|
Net
Profit Margin
|
16 %
|
18 %
|
-2 %
|
Interest
Coverage Ratio
|
52.87
|
67.44
|
-14.57
|
Effective
Tax
|
17 %
|
16 %
|
+1%
|
Others
Estimated monetary
value of benefit in kind for key management personal had increase significantly
from RM 378,796 (2018) to RM 17,029,482 (2019). This benefit in kind is not
recognised in the consolidated financial statement.
CONS:
|
è
RM 17,029,482 of estimated monetary
value benefit in kind for key management in 2019 not recognised in the
consolidated financial statement.
|
Warrant
The company does not
issue any warrant to the market. Warrants available in Bursa are issued by
investment banks.
HARTA issue ESOS to it
employee worth of RM 88,788,100 in 31 March 2019.
Dividend
and Bonus Issued for the from 2010 - 2019
Year
|
Dividend (RM)
|
Bonus Issue
|
Present Value
(RM)
|
2010
|
0.19
|
1:2
|
0.024
|
2011
|
0.29
|
0.036
|
|
2012
|
0.19
|
1:1
|
0.048
|
2013
|
0.145
|
0.036
|
|
2014
|
0.14
|
0.035
|
|
2015
|
0.12
|
1:1
|
0.06
|
2016
|
0.08
|
0.04
|
|
2017
|
0.1
|
0.05
|
|
2018
|
0.082
|
1:1
|
0.082
|
2019
|
0.078
|
0.078
|
|
Average
|
0.081
|
Base on 13 April 2020
price RM7.42, HARTA had average dividend yield of 1.09%.
Relative Indicator
Price is based on 13
April 2020 closing price RM 7.42 and 2019 annual report.
55.83
0.675
10.99
Market
Research
Date
|
Research House
|
Target Price
|
31-3-2020
|
7.40
|
|
26-3-2020
|
6.40
|
|
26-3-2020
|
6.09
|
|
26-3-2020
|
6.50
|
|
26-3-2020
|
5.99
|
|
25-3-2020
|
8.00
|
|
12-2-2020
|
6.20
|
|
12-2-2020
|
6.35
|
|
Average Target Price
|
6.61
|
FUTURES
EXCHANGE
HARTA is one of the few
stocks that trade in Bursa Future Exchange under Single Stock Futures (SSFs) under the quote FHAR. Currently investor can trade the price of HARTA (long or
short) for the spot month, the next calendar month and the next two calendar quarterly
month. In the month of April now, investor can trade for April 2020, May 2020,
June 2020 and September 2020.