Investors should be wary of the high price of Hartalega stock. The stock’s PEG ratio is over 2.5, indicating that it is overvalued at the current price. The company has a strong track record of generating high earnings and dividends, while also maintaining a solid balance sheet. The company has also communicated its growth plans openly with investors. In summary, Hartalega has a lot of positive characteristics, but it is hard to justify its high PEG ratio.
The company has a history of distributing less than half of its earnings, but it has changed this policy in FY 2018. This means that Hartalega now distributes at least 60% of its annual net profit to shareholders. This is up from 45% previously. For the 2018 calendar year, the board has declared a 7.95 sen dividend per share. This dividend represents 60% of the company’s EPS of 13.3 sen. This represents a 1.17% dividend yield, which is below the average fixed deposit rate in Malaysia.
Hartalega recently announced a plan to invest RM 7 billion in 16 new manufacturing facilities. This expansion plan would increase the company’s capacity by more than 45,000 pieces per hour, or roughly double the current production rate. The plan is to increase the company’s production capacity by 19 billion pieces per year.