Results Update

Haio has just announced its results for QE30/4/2010. Its net profit dropped by 21% q-o-q or 10% y-o-y to RM14.3 million while its turnover declined by 25% q-o-q or 26% y-o-y to RM99 million. The decline in both sales & net profit was attributable to lower recruitment of mew members due to more stringent rules in lines with new regulations set out by the government.The company hopes to overcome the decline in sales by increasing its range of health supplement & skincare products.


Table: Haio's 8 quarterly results


Chart 1: Haio's 21 quarterly results

Valuation

Haio (closed at RM4.12 last Friday) is now trading at a PER of 12 times (based on last 4 quarters' EPS of 35 sen). With declining top-line and bottom-line, Haio might even trade at single-digit PER until the situation stabilizes.

Technical Outlook

HAio is still in an uptrend. However, the negative crossover of the MACD is signaling further decline in Haio's share price. It may find support at the 50-day SMA line at RM3.35.


Chart 2: Haio's daily chart as at June 25, 2010 (Source: Tradesignum)

Conclusion

Based on the poor financial performance, I would rate Haio a SELL ON STRENGTH.