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HARTALEGA (HARTA): What is the BOTTOM price ?

FeliciaWong
Publish date: Tue, 08 Dec 2020, 10:33 AM
Sharing purpose only.

I called uncle again (he has more than 30 years’ experience). We talked about the drop in glove counters in the past one month whether it is an opportunity to buy in the market. I call him Sifu or master in English. Some of the things that he told me are as below:

  1. Sifu told me HARTA bottom is RM15, current price is super attractive
  2. Sifu said HARTA should go up to RM19 to RM20 range
  3. Sifu said buy and wait for 3 months. Don’t contra and don’t buy on margin

 

1. Sifu told me HARTA bottom is RM15

Last Q Harta made RM545m, next quarter should hit RM700m looking at increasing COVID-19 global cases and the result of other gloves company.

So RM700m * 4 = RM2800m per year

No of shares 3427m

One Year EPS = RM0.82

Bottom PE = 18x ...

Historically 33x PE for Hartalega is the normal level that the stock usually trade at. But during extreme crazy situation like now, sometimes you can get Hartalega at 18x PE

 

So 18 * 0.82 = RM14.76 

2. Sifu said HARTA can fetch RM19

Using the usual 23x PE

 

23 * 0.82 = RM19

If next quarter earnings can be stronger by another 5% then RM20 can be achieved.

 

3. Sifu said buy and wait for 3 months. Don’t contra and don’t buy on margin

Me: How about vaccine? We already have it!

Sifu: I have answered you previously about vaccine. We have to be humble and don’t simply assume that this vaccine or that vaccine will save us all in a short time. Yes vaccine is there but the RM2800m earnings kind of average out high and low ASP. But from now until that day, physical gloves price is still up. So it average each other you see.

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