Monday, September 22, 2008

Haio's topline & bottomline slipped in 1Q2008

Haio has just announced its results for 1Q2009 ended 31/7/2008. Its net profit increased by 92.6% y-o-y to RM13.6 million from RM7.1 million previously, while turnover increased by 90.5% from RM58.3 million to RM112.9 million. However, when compared to the 4Q2008, net profit dropped by 28.2% on the back of a 15.5%-decline in turnover. Haio, which had enjoyed strong growth from its MLM division, attributed the drop in turnover to poorer consumer's purchasing power as a result of higher cost of living. The reduced turnover, coupled with higher operating expenses (due to higher fuel costs), has led to a sharp drop in net profit.

Haio (closed at RM3.34 as at September 19th) is now trading at a trailing PE of 4.5 times (based on its last 4 quarters' EPS totaling 72 sen) or at a P/Book of 1.7 times (based on NTA of RM1.93 per share). At these multiples, Haio share price is considered attractive.

From the chart below, Haio is still in an uptrend. One quarter of profit decline may not dampen investors' sentiment for this stock. For now, this stock is likely to trade sideway between RM3.00 & RM3.60. A break below RM3.00 could be the first sign of danger ahead, while a break below RM2.70 (coinciding with the low of RM2.71 recorded in March 2008) would satisfy one of the two conditions for the start of a downtrend (i.e. a lower 'low' & a lower 'high'). For now, one can hold onto this stock, due to its attractive valuation. If it rebound to RM3.50-60, you may like to reduce some position & taking some profit from your earlier investment.

Chart: Haio's weekly chart as at September 19, 2008 (source: Quickcharts)

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