Haio's financial position is satisfactory, with current ratio at 2.5 times and gearing ratio (defined as Total Borrowings to Shareholders' Funds) at 0.1 times.
Haio (closed at RM3.34 on Friday) is now trading at a trailing PE of 4.8 times or at a Price to Book of 1.8 times. At these multiples, Haio's valuation may be deemed to be reasonable. This could change if its results were to deteriorate.
Technically speaking , Haio's share price has been holding up very well. In fact, Haio appears to have just broken above its medium-term downtrend line at RM3.25-30. As the volume traded is very small, the breakout is tentative. Haio has a consistent share buyback program, which provides good support for the share price. As at March 18th, the company's treasury shares stood at 1.18 million units.
Chart: Haio's daily chart as at 30/3/2009 (Source: Quickcharts)
Based on tougher economic conditions & poorer consumer spending, I am neutral on Haio despite its good growth track record. The share price is likely to trade in a range between RM3.00 & RM3.50.
3 comments:
Hi Alex,
I accumulated some Haio shares when I saw its share price broke above a horizontal resistance at 3.40. In addition, 50day MA had been above 100day MA for some time, I think its base building has come to an end. New trend is around the corner. What is ur opinion?
Hi Junk,
Haio looks bullish on the chart. Here in a case of conflict between technical & fundamental analysis.
While the combined results for 2Q2009 & 3Q2009 is comparable to the combined results for 2Q2008 & 3Q2008, we must bear in mind that 2Q2009 results includes a CNY while 2Q2008 does not. So, to some extent Haio's results for the past 2 quarters are likely to be lower than last year. I believe the same applies for the next few quarters.
It must be noted that Haio has a share buyback program, which creates a steady demand for this stock. I do not think the recent improvement in the share price is due to this program as the number of shares purchased is only about 5-8% of daily volume.
Haio has a strong management team with a proven record of delivering steady growth. So, despite a slight slowdown, many investors may hold onto this stock as it pays good dividend.
Hi Alex,
Thanks for your comment.
Actually I am often confused by market facts and technical signal. When the market is bad, the share price could rise without reason. I made quite a few mistakes because of this. This time I am gonna try new approach, i.e. "technical first, then fundamental".
Good luck to myself :)
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