Haio: Cloudy Outlook Ahead

Result Update

For QE31/1/2018, Haio's net profit dropped 10% q-o-q but rose 25% y-o-y to RM19 million while revenue dropped 17% q-o-q or 4% y-o-y to RM103 million. Overall revenue dropped q-o-q mainly due to lower revenue generated from the MLM and Retail divisions which dropped 20.9% & 10.5% respectively. This has more than offset the increase in revenue for Wholesale of 4.0%.

Revenue for the MLM division was lower because of higher revenue in the immediate preceding quarter due to higher sales generated as a result of incentive trip promotion campaign and 25th year anniversary grand sales promotion. The revenue for the Retail division dropped because of higher revenue in the immediate preceding quarter was mainly derived from its half yearly members’ sales promotion campaign.

These led to lower PBT for MLM and Retail divisions of 27.1% & 80% respectively which more than offset the increase in PBT for Wholesale of 42.9%.


Table: Haio's last 8 quarterly results 


Graph: Haio's last 52 quarterly results

Financial Position 

Haio's financial position as at 31/1/2018 is deemed healthy with current ratio at 3.1 times and total liabilities to total equity at 0.3 times.

Valuation

Haio (closed at RM4.70 last Friday) is trading at a trailing PE of 17.7 times (based on last 4 quarters' EPS of 26.51 sen). Based on earning CAGR of 31% over the past 2 years, Haio's PEG ratio is about 0.6x. Thus, Haio is considered attractive as a growth stock.

Technical Outlook

Haio has risen sharply from RM1.50 in 2016 to recent high of RM5.60. However it has dropped below the horizontal line of RM5.10 as well as its 30-week EMA line at RM5.00. This could signal te end of the uptrend for the stock.


Chart 1: Haio's weekly chart as at Mar 23, 2018  (Source: Shareinvestor.com)


Chart 2: Haio's monthly chart as at Mar 23, 2018  (Source: Shareinvestor.com)

Conclusion

Based on good financial performance & fairly attractive valuation, Haio is a good stock for long-term investment. However I would rate Haio as Under-perform as its technical outlook has turned mildly bearish.

Note:

I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision.