HARTA (5168) : RHB Research maintains Buy on Hartalega
KUALA LUMPUR: RHB Research has maintained its Buy rating on Hartalega with a target price of RM7.70 pegged to a 21 times 2015 price per earnings.
In a note on Thursday, the research house said Hartalega's first two plants’super structures are ready and production lines are currently being installed.
"The first two lines are on schedule to commence operations by end-November and December respectively. The NGC will be built on 112 acres of leasehold land along Jalan KLIA. Hartalega will be commissioning two plants of 12 lines each, with completion slated for 4Q2015.
"Once the two plants are completed simultaneously, another two plants are slated to be built at the same time. All these are under its Phase 1 expansion. Phase 2 will begin after a market observation breather and to complete the remaining two plants consecutively," it said.
It noted that Hartalega expects its installed capacity to progressively reach 22 billion by FY16.
The contribution may not be significant as the lines are being installed instages. Upon completion of its NGC plants, Hartalega’s total installedcapacity could reach 42 billion pieces per annum by 2020, it said.
"We believe there could be some short-term impact on its bottomline as the production lines have yet to contribute to earnings but headcount may be increasing. Nonetheless,we believe the expansion is crucial for the company to maintain its market leadership.
http://www.thestar.com.my
KUALA LUMPUR: RHB Research has maintained its Buy rating on Hartalega with a target price of RM7.70 pegged to a 21 times 2015 price per earnings.
In a note on Thursday, the research house said Hartalega's first two plants’super structures are ready and production lines are currently being installed.
"The first two lines are on schedule to commence operations by end-November and December respectively. The NGC will be built on 112 acres of leasehold land along Jalan KLIA. Hartalega will be commissioning two plants of 12 lines each, with completion slated for 4Q2015.
"Once the two plants are completed simultaneously, another two plants are slated to be built at the same time. All these are under its Phase 1 expansion. Phase 2 will begin after a market observation breather and to complete the remaining two plants consecutively," it said.
It noted that Hartalega expects its installed capacity to progressively reach 22 billion by FY16.
The contribution may not be significant as the lines are being installed instages. Upon completion of its NGC plants, Hartalega’s total installedcapacity could reach 42 billion pieces per annum by 2020, it said.
"We believe there could be some short-term impact on its bottomline as the production lines have yet to contribute to earnings but headcount may be increasing. Nonetheless,we believe the expansion is crucial for the company to maintain its market leadership.
http://www.thestar.com.my
