For QE31/7/2014, Haio's net profit dropped by 42% q-o-q or 29% y-o-y to RM6.2 million while revenue dropped by 19% q-o-q or 9% y-o-y to RM50 million. Revenue dropped q-o-q due to drop in revenue for all three divisions: MLM, Wholesale & Retail. The drop in MLM & Retail divisions was attributed to last quarter's higher sales which coincided with incentive trip promotion.Wholesale division's revenue dropped due to more cautious consumer spending. The decreased revenue led to lower Net Profit.
The explanation for the drop in revenue would have been acceptable except that the revenue of the immediate preceding quarter was also lower q-o-q. So what we have is a string of lower revenue - never a good thing - and declining profit which was brought on by declining sales and declining profit margin. Haio's prospect in the near term looks rather negative.
Table: Haio's last 8 quarterly results
Chart 1: Haio's last 38 quarterly results
Valuation
Haio (at RM2.70 yesterday) is now trading at a trailing PE of 14 times (based on last 4 quarters' EPS of 19 sen. At this PE, Haio is deemed fairly valued.
Techncial Outlook
Haio is in an upward channel, with support at RM2.45 & resistance at RM3.00.
Chart 2: Haio's weekly chart as at Sep 24, 2014 (Source: Tradesignum)
Conclusion
Based on poorer financial performance & full valuation, I would revise Haio's rating to a TAKE PROFIT.
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.
3 comments:
Hi Alex,
What you think about ibhd, amprop and aax as these shares are down trending but there is a likely growth seeing its planning and financial improvements (except for aax due to its first year annivesary of ipo)?
Thank you for the comments =)
Hi martinkakashi
My take on these stocks are:
1) Ibhd is a good company. However the share price rose from RM0.30-0.40 in early 2013 to a recent high of RM1.50-1.60. Its share capital has been substantially enlarged. Besides some dilution in earnings, enlarged share cap means more supply of shares and this needs to be adsorbed by the market. I expect a period of consolidation, probably at RM1.00 mark, especially if property market remains in a doldrums.
2) Amprop is a decent mid-size conglomerate. Its share price rose from RM0.50 in early 2013 to a recent high of RM1.20. Again, I expect consolidation at around the RM1.00 mark.
3) Aax is a different kettle of fish, compared to the above 2 stocks. Aax has been sliding since its listing. In late July, it broke above the downtrend line. However, that did not lead to an uptrend as the company is still bleeding heavily due to overcapacity. It will be sideways movement between RM0.75 & RM0.87 for a while. A breakout of that range will point the way forward for this stock. I am inclined to believe it will more likely to be upward.
Good luck!
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