Haio- top-line dropped but bottom-line improved

Results Update

For QE31/7/2012, Haio's net profit increased by 12% q-o-q or 33% y-o-y to RM10.3 million while revenue was up 20% y-o-y but dropped by 12% q-o-q to RM61 million. All 3 divisions- MLM, Wholesale & Retails- suffered a q-o-q drop in revenue. Unlike the other 2 divisions, the wholesale division experienced increased pre-tax profit due to lower operating expenses and higher profit margin from sale of patented medicine products & duty-free items.


Table 1: Haio's last 8 quarterly results

Chart 1: Haio's last 30 quarterly results

Valuation

Haio (closed at RM2.02 yesterday) is now trading at a PE of 11 times (based on last 4 quarters' EPS of 18.26 sen). At this PE multiple, Haio is deemed fully valued.

Technical Outlook

Haio will likely to continue to trade sideway between RM1.90 & RM2.10. Beyond that, it will encounter support at RM1.75 & resistance at RM2.35.

Chart 2: Haio's weekly chart as at Sept 19, 2012 (Source: Tradesignum)

Conclusion

Based on fully valuation & unexciting technical outlook, I would rate Haio a HOLD.

Note:
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, Haio.