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Results Note – Hartalega (ADD, maintain) - 9MFY03/13's results within expectation




Affin Hwang Investment Bank Bhd


05 Feb 2013





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9MFY03/13 core net profit rise +11% yoy to RM172.3m As anticipated in our report, “Efficiency is key” on 16 Jan 2013, Hartalega’s (Harta) 9MFY03/13 core net profit had grown by a healthy +11% yoy to RM172.3m. This is mainly driven by: 1) lower raw material cost, namely nitrile price, down -25% yoy, 2) strong 9MFY03/13 volume sales growth of +21.5% to 7.25bn pieces (utilization rate at c.91%), and 3) the continued improvement in operating efficiencies underpinned by increased plant automation. Notwithstanding the 6.6% decline in ASP (in tandem with the lower raw material cost) to RM105/1000 pieces for nitrile gloves, the group’s topline revenue had grown by +10% yoy to RM762.3m. This is driven by the strong +22% yoy growth in nitrile gloves demand which has offset the lower ASP. The group’s net profit margin also edged up by 0.7%-points yoy to 29.5% attributed to the favourable raw material cost and improved operating efficiencies. All in, results were within our and consensus estimates, accounting for c. 75% of our and consensus full year forecasts.

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