Aji's bottom-line recovered from the dip in previous quarter

Results Update

Aji has just announced its results for 1Q2009 ended 30/6/2009. Its net profit increased by 291% q-o-q or 16.2% y-o-y to RM7.0 million while turnover was up 17.3% q-o-q or 23.8% y-o-y to RM71.3 million. The sharp sequential increase in net profit was attributable to a low base in 4Q2008, when Aji's bottom-line took a hit due to higher selling expenses resulting from intensive sales & promotional activities. The continued improvement in bottom-line & top-line resulted from increased export to the Middle East as well as higher domestic sales.


Table 1: Aji's 8 quarterly results

Aji's sale has been rising steadily over the past 16 quarters, as shown by the chart below.


Chart 1: Aji's 16 quarterly results

Valuation

In term of valuation, Aji (closed at RM3.18 yesterday) is now trading at a trailing PE of 9.6 times (based on last 4 quarters' EPS totaling 33 sen) or at 1 times its Book Value of RM3.17. At these multiples, Aji is still fairly attractive for a growth stock.

Technical Outlook

Aji's gradual uptrend (SS) picked up pace in November last year and turned into the accelerated uptrend (S1S1). Aji has recently tested its May high of RM3.20 again. A failure to surpass this level means that Aji may have put in a temporary top. In the event of correction, Aji may pull back to the S1S1 uptrend line support of RM2.95-3.00. At lower level, we can expect horizontal line support to kick in at RM2.85 & RM2.70.


Chart 2: Aji's weekly chart as at Aug 17, 2009 (Source: Quickcharts)

Conclusion

Based on good financial performance & reasonable valuation, Aji is good stock for a long-term investing. Accumulate if the stock were to pull back to the RM2.80-3.00 level.