This article first appeared in The Edge Financial Daily on February 7, 2018 - February 13, 2018

KUALA LUMPUR: The world’s largest synthetic glove maker Hartalega Holdings Bhd yesterday announced a 70.7% jump in quarterly net profit, together with a four sen interim dividend payout, and a proposed bonus issue on the basis of one bonus share for every one existing share held.

Its net profit rose to RM113.02 million for the third quarter ended Dec 31, 2017 (3QFY18), from RM66.23 million a year ago, driven by higher sales and improvement in production capacity, as well as lower costs due to improved operational efficiencies.

Quarterly revenue rose 32.2% year-on-year to RM603.14 million from RM456.29 million, due to a 36.2% rise in sales volume.

The four sen payout it announced — payable on March 28 — is the second interim dividend for FY18, and double the two sen it announced in the same period last year. This brings its year-to-date (YTD) FY18 dividend payout to 10 sen from six sen for comparable YTD FY17.

In a statement, its managing director Kuan Mun Leong said a strategy that was put in place several years ago by the group is bearing fruit.

“We have timed the market well, and this is reflected in our increased sales volume and higher average selling prices for the quarter under review. These were the driving factors which enabled us to deliver strong top- and bottom-line results,” he said.

The group also revised its dividend policy to pay a minimum 60% of its annual net profit to shareholders, up from the current 45% minimum. The revised policy will take effect in FY18.

For the cumulative nine-month period ended Dec 31, 2017, Hartalega’s net profit rose 66.7% y-o-y to RM322.75 million from RM193.62 million, while revenue increased 38.1% y-o-y to RM1.79 billion from RM1.3 billion.

Meanwhile, it said the proposed bonus issuance, which will be based on an entitlement date to be fixed, is to further enhance the stock’s liquidity and reward shareholders for their continuous support.

The group’s prospects remain bright “with nitrile gloves commanding 61% of Malaysian rubber glove exports”, said Kuan. “Robust demand is expected to continue, particularly as Chinese vinyl glove producers are facing challenges in light of stricter environmental laws under China’s anti-pollution drive.”

As for Hartalega’s Next Generation Integrated Glove Manufacturing Complex, it is well on schedule to meet growing demand. “We have completed commissioning of Plant 4 with all 12 production lines operational and construction has commenced on Plant 5. In addition, we aim to launch our world-first non-leaching antimicrobial nitrile examination gloves by the second quarter of 2018,” Kuan said.

Hartalega shares slid 52 sen or 4.58% to RM10.84 yesterday, giving it a market capitalisation of RM17.94 billion. Over the past 12 months, the counter has gained about 131.64%.