Results Update

Harta announced its results for QE30/6/2010. Its net profit dropped 10.7% q-o-q to RM41.5 million on the back of a 4%-increase in turnover to RM170 million. Compared to the previous corresponding quarter, Harta's net profit was up by 57% while turnover was up by 36%. Our concern however is on the break in the sequential rise in the bottom-line which is indicative of the rubber glove sector entering into a more difficult operating environment.


Table: Harta's last 8 quarterly results



Chart 1: Harta's last 11 quarterly results

Technical Outlook

Harta broke below its uptrend line support at RM8.00 on Monday. Unless a quick recovery happened, the technical outlook for Harta has turned bearish. (Note: As at 9.13 am, Harta was trading at RM8.01. A possible recovery?)


Chart 2: Harta's daily chart as at August 10, 2010 (Source: Quickcharts)

Conclusion

Based on the break in the sequential rise in the company's bottom-line- which was also witnessed in the recent quarterly results for Topglove & Adventa- as well as the bearish breakdown of its uptrend line, I believe Harta is likely to have peaked. As such, it is advisable to take profit on this stock.