Thursday, May 10, 2012

AJI may continue with its prior uptrend

 Technical Outlook

AJI may have finally broken out of its long consolidation. The stock made a high of RM4.53 in April 2010 and then consolidated between RM3.50 & RM4.25 for the next 24 months. Today it broke above the RM4.25 resistance for the first time. What a day for a breakout!

Chart 1; AJI's weekly chart as at May 10, 2012_9.15am (Source: quickcharts)

Recent Results Update

AJI's latest quarterly results is QE31/12/2011. It should be issuing its results for QE31/3/2012 soon. We can see that the company's revenue has been rising steadily while its profit has remained constant. The company is either unable to pass on the higher cost to the consumer or is adopting a strategy of expanding market share at the expense of its profit margin. The stagnant bottom-line left investors unimpressive and they were not willing to chase the stock higher. Will the upcoming results  for QE31/3/2012 signal a change? We will have to wait & see.

Table: AJI's last 8 quarterly results

Chart 2: AJI's last 26 quarterly results


AJI (closed at RM4.23 yesterday) is trading at a PE of 10.3 times (based on last 4 quarters' EPS of 41 sen). At this PE multiple, AJI is deemed undemanding and could potential trade up to a PE of 14-15 times.


Based on technical consideration, AJI is deemed a trading BUY. However, being a consumer stock that produces a unique product & experiencing good growth as well as trading at a PE of only 10.4 times, AJI is rated a good stock for long-term investment.


Ai Ling said...

Hi Alex,
Any comment on SIN HENG CHAN? Understand that the stock price was 1 time higher than $60 & the lowest price was less than 50 cents. Now the price is at $1.26, is it worth to buy now? Appreciate your advise here! Thanks in advance!

kelvin888 said...

Dear Alex,
Is Malayan Floor Mill Bhd into consolidation trend or still with its prior uptrend?
I exercised the right issues with entitlement of bonus and warrant.
Please advice what shall I do when the right and warrant listing soon?
Shall I sell the mother shares and buy the warrant to pocket more profit later?
Thank you.

Alex Lu said...

Hi Ai Ling

SIN HENG CHAN is a not an exciting company, making net profit of RM3-4 million per annum. Last year, its net profit jumped due to an exceptional gain fo RM11 million from sale of a subsidiary.

Chartwsie, I think the stock has just peaked. If it dropped below the recent reaction low of RM1.17, the slide could gain momentum. Even if it can stay above that level, it would probably move sideway for a while.

Better to avoid this stock.

Alex Lu said...

Hi kelvin888

My earlier call to sell on strength for Malayan Floor Mill Bhd remained.