Ajiya testing its downtrend line

Ajiya Bhd ('Ajiya'), which is involved in the manufacture and supply of materials used in the construction and building based industries, has just announced its results for QE31/8/2009.

Results Update

Its net profit increased by 49% q-o-q or 6% y-o-y to RM7.5 million. Turnover at RM83 million was up 3.6% when compared to the preceding quarter but down 4.5% when compared to the previous corresponding quarter.


Table 1: Ajiya's 8 quarterly results

From the chart below, we can see that Ajiya's top-line & bottom-line to the level achieved in QE31/8/2008.


Chart 1: Ajiya's 12 quarterly results

Valuation

Ajiya (last traded at RM1.59 as at 11.00 am today) is now trading at a trailing PE of 5.5 times (based on last 4 quarters' EPS of 29 sen). Price to Book is about 0.6 times (based on NTA per share of RM2.53 as at 31/8/2009). As such, Ajiya is fairly attractive.

Technical Outlook

Ajiya has just surpassed its long-term downtrend line at RM1.50-55. If it can maintain above the downtrend line, then the outlook for Ajiya will be fairly bullish.


Chart 2: Ajiya's daily chart as at Oct 7, 2009 (Source: Tradesignum)

Conclusion

Based on attractive valuation & good financial performance, Ajiya is a good stock for long-term investing. If it can break above the downtrend line, it will become a trading BUY.