News

Hartalega on the Uptrend

Posted Date : 22^nd April, 2013

Written by Charlotte Chong at theedgemalaysia.com

Monday, 22^nd April, 2013 09:59

KUALA LUMPUR: Hartalega Holdings Bhd, world's largest synthetic nitrile glove producer, does not see the H7N9 virus outbreak in China as the determining factor pushing up its share price in the past two months.

Managing director Kuan Mun Leong believes Hartalega's strong fundamentals have been the major reason for the continued rise in the company's share price since the first death related to the virus was discovered in early March this year.

"The movement of Hartalega's equity price was a reflection of the market's confidence in the company's fundamental strengths, and its potential as the world's leading and largest nitrile glove manufacturer," Kuan told The Edge Financial Daily in an interview.

Hartalega's share price was hovering at RM4.70 to RM4.80 before the first H7N9-related death was announced by the Chinese authorities in March. The stock climbed to RM5 early this month and closed at RM5.27 last Friday.

In fact, the share price has been on the uptrend for the past five years. From 60 sen in January 2009, the stock climbed to RM2 in January 2010, RM2.60 in January 2011, RM2.80 in January 2012 and RM4.70 in January 2013.

During the five years, the company's pre-tax profits grew in tandem with the share price increase. For the 2009 financial year ended March (FY09), the company recorded a pre-tax profit of RM95.5 million, rising to RM177.8 million in FY10.

It further increased to RM242.8 million for FY11 and RM258.4 million for FY12. For the ine months of FY13, Hartalega's pre-tax profit reach the RM224 million mark.

Hartalega produces 11 billion gloves a year, of which 90% is made up of nitrile gloves. They are made from synthetic rubber, which non-latex and protein free, and suitable for users who are sensitive to natural rubber proteins. Kuan said the company does not foresee an increase in glove demand in the near term due to the H7N9 virus scare.

"To date, there is no evidence of sustained human-to-human transmission of the H7N9 virus and only isolated cases have been reported in China.

"Should there be an upsurge in demand, we will be well-positioned to serve the market's needs via our subsidiary in China as well as increased capacities coming onstream from Plant 6," said Kuan.

Moving forward, he said the company is confident that the global glove market will continue to grow at a healthy rate of 8% to 10% per annum, and is bullish on prospects for the nitrile glove segment.

Hartalega was recently named the best managed medium cap company in Malaysia by Asiamoney, winning the magazine's Best Managed Company Awards 2012 for a second time. It first won the award in 2010.

This article first appeared in The Edge Financial Daily, on 22^nd April, 2013.

Source:
http://www.theedgemalaysia.com/in-the-financial-daily/236608-hartalega-on-the-uptrend.html