Monday, March 30, 2009

Haio's top-line & bottom-line rebounded

Haio has just announced its results for 3Q2009 ended 31/1/2009. Its net profit increased by 10.1% q-o-q to RM12.0 million while turnover increased by 17.0% to RM102 million. Compared to the same quarter last year, net profit was 10.2% lower while turnover was up 1.6%. I believe that Haio's performance for 3Q2009 may have benefited from increased consumer spending during the year-end period as well as CNY festival (which fell in January 2009). In addition, there could be a rebound in MLM business in 3Q2009, after a drop-off in 2Q2009 when sale suffered due to the Ramadam festival (which fell in October 2008). Despite management's cautious optimism of delivering satisfactory results going forward, I believe Haio's performance is likely to suffer.



Haio's financial position is satisfactory, with current ratio at 2.5 times and gearing ratio (defined as Total Borrowings to Shareholders' Funds) at 0.1 times.

Haio (closed at RM3.34 on Friday) is now trading at a trailing PE of 4.8 times or at a Price to Book of 1.8 times. At these multiples, Haio's valuation may be deemed to be reasonable. This could change if its results were to deteriorate.

Technically speaking , Haio's share price has been holding up very well. In fact, Haio appears to have just broken above its medium-term downtrend line at RM3.25-30. As the volume traded is very small, the breakout is tentative. Haio has a consistent share buyback program, which provides good support for the share price. As at March 18th, the company's treasury shares stood at 1.18 million units.


Chart: Haio's daily chart as at 30/3/2009 (Source: Quickcharts)

Based on tougher economic conditions & poorer consumer spending, I am neutral on Haio despite its good growth track record. The share price is likely to trade in a range between RM3.00 & RM3.50.
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3 comments:

  1. aLanThursday, April 02, 2009 8:40:00 PM

    Hi Alex,

    I accumulated some Haio shares when I saw its share price broke above a horizontal resistance at 3.40. In addition, 50day MA had been above 100day MA for some time, I think its base building has come to an end. New trend is around the corner. What is ur opinion?

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  2. Alex LuFriday, April 03, 2009 11:02:00 AM

    Hi Junk,

    Haio looks bullish on the chart. Here in a case of conflict between technical & fundamental analysis.

    While the combined results for 2Q2009 & 3Q2009 is comparable to the combined results for 2Q2008 & 3Q2008, we must bear in mind that 2Q2009 results includes a CNY while 2Q2008 does not. So, to some extent Haio's results for the past 2 quarters are likely to be lower than last year. I believe the same applies for the next few quarters.

    It must be noted that Haio has a share buyback program, which creates a steady demand for this stock. I do not think the recent improvement in the share price is due to this program as the number of shares purchased is only about 5-8% of daily volume.

    Haio has a strong management team with a proven record of delivering steady growth. So, despite a slight slowdown, many investors may hold onto this stock as it pays good dividend.

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  3. aLanSunday, April 05, 2009 1:21:00 AM

    Hi Alex,

    Thanks for your comment.

    Actually I am often confused by market facts and technical signal. When the market is bad, the share price could rise without reason. I made quite a few mistakes because of this. This time I am gonna try new approach, i.e. "technical first, then fundamental".

    Good luck to myself :)

    ReplyDelete