Friday, December 19, 2008

Haio's topline & bottomline slipped further

Haio has just announced its results for 2Q2009 ended 31/10/2008. Its net profit dropped 20.0% q-o-q to RM10.9 million on the back of a 22.7%-decline in turnover to RM87.3 million. The poorer results was attributable to lower sale from the MLM division due to the Ramadam fasting month in the 2Q2009. However, we can see that the deterioration in Haio's financial performance started in 1Q2009 after the topline & bottomline peaked in 4Q2008. This may reflect the poorer consumer sentiment over the past 2 quarters, due to higher inflation & drop in consumers' income. When compared to the previous corresponding quarter, its net profit for 2Q2009 was still up 19.7% while turnover was up 8.4%.



Haio (closed at RM3.06 yesterday) is now trading at a trailing PE of 4.2 times (based on the past 4 quarters' EPS of 73 sen) or at a Price to Book of 1.5 times (based on NTA per share of RM1.98 as at 31/10/2008). At these multiples, Haio looks very attractive. However, Haio's lower earning is likely to continue to slide in the near future, given the challenging outlook for the Malaysian & global economy.

Haio's share price is still in an uptrend, with support at RM2.90-3.00. This is also a very strong horizontal support level for this stock. A break below this level could sign the beginning of the downtrend for the stock.


Chart: Haio's weekly chart as at Dec 18, 2008 (source: Quickcharts)

While you may say that the poorer outlook for Haio has already been factored into the share price, you should continue to watch Haio closely if you have a position in this stock. You should quickly dispose of this stock if the share price broke below the RM2.90-3.00 support. If you do not have any position in Haio, then you should avoid Haio even when the share price reaches the support level, given the poor outlook for consumer stocks for the next few quarters.
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6 comments:

  1. 小旺子Friday, December 19, 2008 9:37:00 PM

    This comment has been removed by the author.

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  2. 小旺子Friday, December 19, 2008 9:41:00 PM

    The retail market or should I said the whole world is in a bad shape. Especially, during Aug 08, when the price of petroleum raised in Malaysia, then comes the US financial crisis. How should one expect companies to perform?

    Are you saying sideline is the best choice at the moment ?

    ReplyDelete
  3. Alex LuMonday, December 22, 2008 9:17:00 AM

    Hi 小旺仔,

    On your question of whether we should stay on the sideline during this period, I think one should not expect a simple answer like, "buy now because it is cheap" nor "don't buy yet because we haven't gotten a bullish technical signal". I believe that the bottoming phase has begun & it may last for 1 or 2 quarter(s). In term of prices, the downside is quite limited, maybe another 10%. Nevertheless, this is a constantly changing environment, which necessitates close monitoring & adjustment, now & then. But, there are signs that the Asian markets are beginning to recover and Malaysian market should not be too far behind.

    ReplyDelete
  4. 小旺子Tuesday, December 23, 2008 9:17:00 AM

    Thanks for your advice. I think the best bet now is to accumulate quality counters for long terms investment. (Say slowly purchase over the next 1-2 quarters) We can either wait for the break out of long term chart to upside. Then we will have live with the higher stock price.

    ReplyDelete
  5. IvanTuesday, January 13, 2009 12:02:00 AM

    Hi Sir,

    Thanks for the free sharing through the blog. May I know normally which stock that you will cover in? With the +ve sign that a stock whereby it will go up (share price) and on the same time, they annouce the Quaterly income ?

    ReplyDelete
  6. IvanTuesday, January 13, 2009 12:02:00 AM

    Hi Sir,

    Thanks for the free sharing through the blog. May I know normally which stock that you will cover in? With the +ve sign that a stock whereby it will go up (share price) and on the same time, they annouce the Quaterly income ?

    ReplyDelete