Wednesday, May 29, 2013

Aji- bottom-line still sliding


Result Update

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

Valuation

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.

Technical Outlook

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)

Conclusion

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.

Note:
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.

8 comments:

Anonymous said...

hi alex-i have been tracking aji for the past 3 months wondering why it stayed depressed for months.Watching to go in but somehow the movement seems to drag.watching keenly like a hawk 2 jump in.Thanks to you with this uptake.I will look the other way.Pity.Aji got alot of reserve.Long time no Bonus.By the way how is your take on DRB?Got in at 279 2 days ago.Your comment please

Yeoh Salina said...

Dear Alex, What do you think of Benalec

Alex Lu said...

Hi Yeoh Salina

Benalec is an interesting stock. Its involvement in reclamation of land in Pengerang for the RAPID project means that it may benefit from O&G play as well as the Johor property play.

It is moving within a triangle with upside resistance and downside support at RM1.40 & RM1.10, respectively. Recently, it broke above the RM1.40 mark & went to a high of RM1.50 before dropping back within the triangle. Let's see whether we will have another breakout soon and hopefully a rally that surpass the recent high of RM1.50 to start the next upleg for this stock.

Alex Lu said...

Hi charles leong

If DRB can surpass the psychological RM3.00 mark & its Feb 10 high of RM3.15, it may charge up to RM4.00.

I think there are many things going for it and, like CMSB, the recent GE result was like a reprieve. As the saying goes, make hay while the sun shines...

Stanley said...

Hi Alex,

Suria looks potential, if the Jessekton project materialises, the growth would be tremendous. Pls comment on the potential.

Chun Mun said...

Hi Alex,
What do you think about PBA? Is it the good time to enter?

Alex Lu said...

Hi Stanley

I am not familiar with Suria. I felt that its recent rally mirrored the rally seen in Sarawak stocks. A kind of East Malaysian power play, if I may call it. However, Sabah political masters are more diffused and I doubt they would back one horse, unlike Sarawak.

Chartwise, Suria is correcting. You may consider buying if it comes off to RM1.70-1.75.

Alex Lu said...

Hi Chun Mun

PBA is a lost cause. Penang State Government is a populist government and it would not accept its agencies (PBA may be viewed as such) making too much profit. If this stock can rally up to RM0.90-0.95, you may consider selling it off.