Ajiya Bhd ('Ajiya') is mainly involved in the manufacture and supply of materials used in the construction and building based industries in Malaysia.
Recent Financial Results
Ajiya has just announced its results for 2Q2009 ended 31/5/2009. Its net profit increased 40.0% q-o-q to RM5.0 million on the back of a 13.2%-increase in turnover to RM80.2 million. Compared to the previous corresponding quarter i.e. 2Q2008, both net profit & turnover are lower by 22.2% & 0.5%, respectively.
Table: Ajiya's 8 quarterly results
I have appended below Ajiya's last 11 quarters' top-lien & bottom-line movement which shows the zig-zaggy rise in its turnover but profitability remained between the RM5-10 million mark.
Chart 1: Ajiya's 11-quarter top-line & bottom-line performance
Valuation
Ajiya (closed at RM1.26 yesterday) is now trading at a trailing PE of about 4.5 times (based on last 4 quarters' EPS of 28 sen). At this multiple, Ajiya's valuation is undemanding.
Technical Outlook
Ajiya has broken above its immediate downtrend line at RM1.20 in April. The long-term downtrend line for Ajiya still lies overhead, with resistance at RM1.50-55. Ajiya is likely to drift lower over the next few weeks as its MACD indicator has already hooked down. Good entry for Ajiya is at RM1.00-10.
Chart 2: Ajiya's weekly chart as at July 7, 2009 (source: Quickcharts)
Conclusion
Ajiya is an inexpensive building material stock which has bottomed out. It may benefit from construction projects to be carried out under the government's various fiscal stimulus package or the revival of the property sector, further down the road.
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