Wednesday, May 29, 2013
Aji- bottom-line still sliding
For QE31/3/2013, Aji's net profit rose 47% q-o-q but dropped 24% y-o-y to RM4.4 million while revenue rose 5% q-o-q or 2% y-o-y to RM85 million. Bottom-line improved q-o-q due to higher sales of Industrial Seasoning products as well as lower factory overhead costs incurred.
Table: Aji's last 8 quarterly results
Chart 1: Aji's last 31 quarterly results
Aji (closed at RM4.45 today) is now trading at a PE of 14 times (based on last 4 quarters' EPS of 32 sen). At this multiple, Aji is deemed fairly valued. However, the declining bottom-line could lead to PE contraction which would depress the share price.
Aji is in an uptrend line with support at RM4.25-4.30. If this uptrend line is violated, the share price may drop to the psychological RM4.00 mark. The next support would be the horizontal line at RM3.50.
Chart 2: Aji's weekly chart as at May 29, 2013_12.30pm (Source: Quickcharts)
Based on declining profit & profit margin, AJI is a stock to be avoided. For those holding the stock, you may choose to SELL INTO STRENGTH for now.
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, AJI.