KLCI Stock - HAIO / 7668 - 2010 Quarter 4

Market Cap : 202190282*4.12 = 833,023,961.84 (Small)
NTA per share : (209202-85)/199659 = 1.05
P/BV : 4.12/1.05 = 3.9238
Forecast P/E now : (4.12-0.2)/0.3142 = 12.48 (High)
ROE : 32.74% (High)
DY : 0.2/4.12*100 = 4.85
Fixed Asset Turnover(3 year) : (1.8311+1.7534+1.8315)/3 = 1.8053(Low)
Liquidity Ratio : 184016/49297 = 3.7328 (Very High)
Receivables Collection Period : (19902+36590)/2/(511064/365) = 20 days (Acceptable)
My Target Price : 3.46+0.2 = 3.66 (PE 11, EPS 0.3142, DPS 0.2)
My Decision : NOT BUY unless price below 3.7
My Comment : Revenue and profit dropped, good cash flow, low debt and decreased, navps increased dropped
Technical Support Price : 3.6
Risk Rating : MODERATE

My notes based on 2010 Quarter 4 report (number in '000):
- For the fourth quarter ended 30 April 2010, the Group recorded lower revenue and pre-tax profit, dropped by about 26% and 32% respectively as compared to the corresponding quarter of the preceding year. The current quarter performance is below internal target and the MLM division is currently applying more stringent rules on new members’ recruitment to be in line with the regulations set by the authorities, coupled with recent rise in interest rate had indirectly affected the growth of new members venturing into MLM business as entrepreneurs
- The retail division had recorded historical high in revenue and profit in the fourth quarter, as the Lunar Chinese New Year coincide with the year end members’ sales promotion, coupled with the success of its sales of house brand products had generated higher profit contribution to the Group
- For the financial year under review, the Group achieved higher revenue as compared to the corresponding period of the preceding year, an increase of about 17%. The increase in revenue was mainly contributed from the wholesale division and its principal subsidiaries, the MLM and retail divisions in the first half of the financial year coupled with higher rental income received during the financial year
- The Group profit before taxation increased by about 26% for the corresponding period of the preceding year. The substantial increase in profit was mainly due to higher revenue achieved as mentioned above, especially for the retail division, its EBIT had increased from last year of 7.3% to 9.8% mainly contributed by its higher margin house brand products. The technology division is still in the research and development stage and does not have any significant progress as at to date
- For the fourth quarter under review, the Group recorded lower revenue and profit before
taxation as compared with the immediate preceding quarter due to most of the sales orders were placed before the Chinese festive season
- Despite the above, the retail division had recorded higher revenue and profit in the current
quarter as compared with the immediate preceding quarter, profit increased by more than 100%. Higher profit achieved was mainly generated from higher revenue made during the Chinese Lunar New Year coincide with the year end members’ sales promotion in the fourth quarter, coupled with the success of its sales of house brand products also brought in additional contribution to the Group
- Estimate next 4Q eps after 2010 Q4 result announced = 0.0714*4 = 0.2856*1.1(10% QbQ improvement adjustment) = 0.3142, estimate PE on current price 4.12 = 12.48(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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