Hai-O Enterprise Bhd ('Haio') is a well-known name in the field of Chinese medicines, medicated wines & healthcare products. In addition to retailing & wholeselling such products, Haio is also involved in multi-level marketing & the manufacture of pharmaceutical products.
Recent Financial Results
Haio's latest financial results for QE31/1/2007 shows that the group can sustain its improved performance as recorded in QE31/10/2006. For QE31/1/2007, Haio's net profit increased marginally by 0.6% q-o-q to RM5.0 million while its turnover grew by 22.8% q-o-q to RM51.4 million. When compared to the previous corresponding quarter, the net profit jumped by 90.5% while turnover also soared by 40.8%.
Valuation
If Haio can sustain this performance, its full-year EPS will amount to 30 sen. Based its closing price of RM1.92 as at today (March 20), Haio is now trading at a PE of 6.4 times. This means that Haio's valuation is currently undemanding.
Technical Outlook
The stock has been in a gradual uptrend for the past 14 months (see the chart below). A good entry level would be near its 100-day SMA of about RM1.70.
Chart: Haio's daily chart as at March 20, 2007
Conclusion
Based on inexpensive valuation & nice technical set-up, Haio is a good stock to invest in for the medium-term. However, we must note that Haio is a relatively quiet stock with thin daily trading volume.
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