HPI- awaiting bonus issue

HPI has just announced its results for QE31/8/2009 (its 1Q2010). Compared to the previous corresponding quarter, its net profit increased 42% despite a 10%-drop in turnover. The increased net profit was attributable to the contribution of subsidiary at Perak and the paper mill company. Compared to the immediate preceding quarter, its net profit dropped by 20% despite a 15%-increase in turnover. The decline in net profit was due to the higher raw material prices in corrugator companies during the reporting quarter.



HPI (closed at RM1.64 at the end of the morning session) is now trading at a trailing PE of 3.3 times (based on last 4 quarters' EPS totaling 49 sen). At this multiple, HPI is still very attractive.

Technically speaking, HPI is poised to test its recent August high of RM1.84. The share price seems to be trapped in an expanding triangle in the past 3 weeks. An upside breakout of the triangle (at RM1.80) as well as the recent high could set the stage for the next upleg for this stock. This could coincide with the entitlement for the 1-for-4 Bonus Issue which was approved by shareholders in an EGM held on Oct 28.


Chart: HPI's daily chart as at Oct 29, 2009_4.15pm (Source: Quickcharts)

Based on satisfactory financial performance and upcoming bonus issue, HPI could be a trading BUY.