Ajiya Bhd ('Ajiya') is principally involved in the manufacture and supply of materials used in the construction and building based industries in
Recent Financial Results
The group has just announced its financial result for QE28/2/2007. For that quarter, Ajiya's net profit has increased by 62.8% y-o-y but dropped by 16.4% q-o-q to RM3.1 million. It attributed its decline to stiffer competition. During the same periods, its turnover has gained 4.1% q-o-q or 34.5% y-o-y to RM57.4 million.
Valuation
Based on its closing price of RM1.28 as at April 27 (today) & its last 4 quarters' EPS totaling 19.0 sen, Ajiya is trading at a PE of 6.7 times. This is deemed fairly undemanding, given the likely pick-up in the building material sector. This sector will benefit from the improvement in the property sector as well as more activities in the construction sector.Technical outlook
From the chart below, we can see that Ajiya share price has clearly bottomed out. Nevertheless, its upside is very limited as it has not been able to surpass its strong horizontal resistance at RM1.30/31 level. A break above this level could be the beginning of the uptrend for this stock.
Chart: Ajiya's daily chart as at April 27 (courtesy of Tradesignum.com)
Conclusion
Based on improving financial performance, Ajiya could be a good BUY for medium-term investment. For traders, you should wait for a break above the resistance of RM1.30/31.
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