Results Update

Aji reported another fantastic set of numbers. For QE31/12/2009, its net profit increased 60% q-o-q or 71% y-o-y to RM9.5 million while turnover increased 5.6% q-o-q or 17.6% y-o-y to RM72.7 million. The increased turnover was due to higher selling prices & increased sales volume. Bottom-line has benefited from increased sales plus an exceptional gain of RM1.67 million from the liquidation of an associated company.


Table 1: Aji's 8 quarterly results

Aji's top-line has been rising steadily for the past few years. Lately, its bottom-line have also started rising smartly.


Chart 1: Aji's 18 quarterly results

Valuation

Aji (closed at RM3.30 yesterday) is now trading at a PER of about 6.3 times. This PER is arrived by using an annualized EPS of 52 sen (based on the EPS of 15.67 sen for QE31/12/2009 less the exceptional gain from the liquidation of an associate company of about 2.74 sen). For a company that has a proven track record of steady growth, I believe Aji deserves a PER of 12-15 times. Based on a PER of just 12 times, Aji's fair value is about RM6.24.

Technical Outlook

Aji has been rising steadily since March last year. As at 10.00am thus morning, it is testing its strong horizontal resistance at RM3.40-50.


Chart 2: Aji's monthly chart as at Feb 10, 2010 (Source: Tradesignum)

Conclusion

Based on good financial performance & attractive valuation, Aji is a good stock for long-term investment.