Haio has just announced its results for QE31/1/2011. Its net profit increased by 3.5% q-o-q to RM6.3 million on the back of a 9.5%-increase in turnover to RM57.6 million. Compared to the previous corresponding quarter, its net profit was 65% lower while turnover was 56% lower. The company attributed the improvement to higher sales from the retail division and the recovery of MLM division's sales.
Table: Haio's last 8 quarterly results
Chart 1: Haio's last 24 quarterly results
Financial Position
Despite poorer financial performance for 4 quarters, Haio's financial position is still satisfactory. As at 31/1/2011, its current ratio stood at 3.4 times while debts to equity stood at only 0.1 time.
Valuation
Haio (closed at RM2.27 yesterday) is now trading at a PE of 13 times (based on last 4 quarters' EPS of 17 sen). For a stock that had suffered a collapse in its main business (MLM division), a PE of 13 times is unduly high. Unless a strong recovery happens immediately, I believe the stock could trade at PE of 8 times or lower.
Technical Outlook
Haio is in a downtrend line, with resistance at RM2.50. It also faces immediate resistance from horizontal line at RM2.40 while its immediate support is the horizontal line at RM2.00.
Chart 2: Haio's weekly chart as at March 23, 2011 (Source: Quickcharts)
Conclusion
Despite a better results for the latest quarter, Haio is still rated a SELL based on overvaluation & poor technical outlook.
4 comments:
Hi Alex,
Not sure weather you aware that there is email circulating about their MLM business. It was stated in the email that not to buy their products because the price is very high and the product is not worth half of the amount charges.
Hi william
I haven't seen the email but I would not be surprised at all. Things like this would only hurt a share price if it is true. The fact that the top-line & bottom-line have plummeted is ample proof that things are seriously wrong with Haio.
hi alex,
what do u see on hpi?
Hi Alex,
Would like to get your opinion on KSL Holdings. Since its declaration on renounceable rights issue of new warrants, the stock has been moving up although volume is very light. Is this being done to give a higher exercise price of the warrants (to be determined on a future price fixing date)? The company does seem fundamentally strong. But with the current uncertain market conditions, I wonder if it would be best to take profit now or hold for the new warrants. Thanks!
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