KUALA LUMPUR: RHB Research has raised fair value for Hartalega to RM7.93 (from RM7.36) based on unchanged target CY10 PER of 13 times. However, its Market Perform call, however, remains unchanged.

It said on Friday, Jan 29, Hartalega’s 3QFY03/10 net profit came in above its but within consensus expectations with nine-month net profit of RM96.8 million (+80.8% on-year) accounting for 81.8% and 75.3% of its and consensus estimates respectively.

Key variances were better-than-expected margins, where Hartalega achieved nine-month EBIT margin of 30.3% versus full-year FY10 EBIT margin of 25.8%, partly offset by a higher-than-expected effective tax rate.

"We have raised our FY10-12 EBITDA projections by 8.6-11.8% to reflect the better-than-expected margins achieved by Hartalega thus far. At the same time, we have raised our FY10-12 interest cost assumptions, and effective tax rate assumptions to 20% p.a. (from 12% p.a.).

"As a result, our FY10-12 earnings projections have been raised by up to 10.0%, 7.1% and 1.0% respectively," it said.