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Friday, June 24, 2011

KLCI Stock - HAIO / 7668 - 2011 Quarter 4

Company Info
Market Capital (Capital Size)436,731,009 (Small)
Par ValueRM 0.50

My Analysis
Forecast P/E now(2.16-0.075)/0.1567 = 13.31 (High)
Target Price1.41+0.075 = 1.49 (PE 9.0, EPS 0.1567, DPS 0.075)
DecisionNot interested unless revenue and profit increase more
Revenue increased 0.9% and is second consecutive quarter increasing but still lower than preceding year corresponding quarter 41.2%, eps increased 34.6% and is second consecutive quarter increasing but stilllower than preceding year corresponding quarter 38.7%, cash generated from operating not enough to cover dividend and other expenses, stronger liquidity ratio at strong level now, lower gearing ratio at below moderate level now, all accounting ratio are good, MLM division recovering
First Support Price2.07
Second Support Price1.8
Risk RatingHIGH

Research House
OSK Target Price1.93 (2011-03-24)
RHB Target Price1.35 (2011-03-24)

Accounting Ratio
Return on Equity13.51%
Dividend Yield3.47%
Profit Margin21.48%
Tax Rate28.09%
Asset Turnover0.8666
Net Asset Value Per Share1.03
Net Tangible Asset per share1.03
Price/Net Tangible Asset Per Share2.1
Cash Per Share0.41
Liquidity Current Ratio4.4159
Liquidity Quick Ratio3.0892
Liquidity Cash Ratio2.4453
Gearing Debt to Equity Ratio0.2151
Gearing Debt to Asset Ratio0.1713
Working capital per thousand Ringgit sale51.1%
Days to sell the inventory87
Days to collect the receivables35
Days to pay the payables44

My notes based on 2011 quarter 4 report (number in '000):-
- The higher revenue contributed by the wholesale and retail divisions in the current financial year has been offset by the larger drop in revenue from its principal subsidiary, the MLM division. During the financial year, the MLM division has gone through a struggling year to realign its business strategies and to restructure its distributor‟s network, which is beginning to see positive results

- The recovery of MLM division in the fourth quarter was the main reason to the increase in the Group‟s revenue and pre-tax profit. The MLM division has been emphasizing heavily in motivation and product training programs. The trip incentive campaign has successfully attracted a wider group of lower level core distributors which had contributed higher revenue to the MLM division

- The recent revision in the interest and utilities rate, coupled with the subsidy reduction program implemented by the Malaysian government will have negative impact on domestic consumer spending and increase the business operating costs

- Estimate next 4Q eps after 2011 Q4 result announced = (0.0428+0.0318)*2*1.05 = 0.1567, estimate PE on current price 2.16 = 13.31(DPS 0.075)
- Estimate next 4Q eps after 2011 Q3 result announced = 0.0318*4*1.05 = 0.1336, estimate highest/lowest PE = 17.33/14.93 (DPS 0.075)
- Estimate next 4Q eps after 2011 Q2 result announced = 0.0307*4*0.95 = 0.1167, estimate highest/lowest PE = 23.91/18.25 (DPS 0.1)
- Estimate next 4Q eps after 2011 Q1 result announced = 0.0391*4 = 0.1564, estimate highest/lowest PE = 20.01/17.46 (DPS 0.12)
- Estimate next 4Q eps after 2010 Q4 result announced = 0.0714*4 = 0.2856*1.1(10% QbQ improvement adjustment) = 0.3142, estimate highest/lowest PE = 12.16/8.78 (DPS 0.2)
- Estimate next 4Q eps after 2010 Q3 result announced = 0.3729, estimate highest/lowest PE = 12.42/9.17 (DPS 0.18)
- Estimate next 4Q eps after 2010 Q2 result announced = 0.2424*4 = 0.9696, estimate highest/lowest PE = 10.78/7.44(DPS 0.42)
- Estimate next 4Q eps after 2010 Q1 result announced = 0.2217*4 = 0.8868, estimate highest/lowest PE = 8.54/6.33 (DPS 0.42)
- Estimate next 4Q eps after 2009 Q4 result announced = 0.1778*4 = 0.7112, estimate highest/lowest PE = 7.44/5.76 (DPS 0.4)
- Estimate next 4Q eps after 2009 Q3 result announced = 0.1463*4 = 0.5852, estimate highest/lowest PE = 6.9/5.06 (DPS 0.4)

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