AJI's net profit plunged

Results Update

AJI has just announced a disappointing set of results for QE31/3/2010. Its net profit dropped by 84% q-o-q or 18% y-o-y to RM1.5 million, while turnover increased by 18% y-o-y but slipped 1% q-o-q to RM71.9 million. The drop in net profit was attributable to higher input & energy cost & more competitive pressure, which resulted in higher expenditure incurred for sale promotion.


Table 1: AJI's last 8 quarterly results


Chart 1: AJI's 19 quarterly results

Valuation

The problem for AJI is in the forecasting of its future earning, which ranges from the low of 5.44 sen achieved last quarter to the high of 15.67 sen achieved in QE31/12/2009. If we assumed an average of 9.1 sen, then AJI, which closed at RM4.16 yesterday, would be trading at a PER of 11 times. Based on the sharp drop in commodities prices in the past few weeks, I believe that the average EPS of 9.1 sen is reasonable.

Technical Outlook

AJI should have a good psychological support at RM4.00. The next support is about RM3.40-50, based on horizontal line support at RM3.50 & uptrend line support at RM3.40.


Chart 2: AJI's week chart as at May 24, 2010 (Source: Tradesignum)

Conclusion

Based on poor financial results, AJI's share price would come under selling pressure for the next few weeks. If the share price were to drop to RM3.40-50 level, AJI would be an attractive stock for long-term investment, trading at PER of about 9.3 times.

Aji's bottom-line increased sharply

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.

Aji's bottom-line recovered from the dip in previous quarter

Aji's bottom-line recovered from the dip in previous quarter: Results Update

Aji has just announced its results for 1Q2009 ended 30/6/2009. Its net profit increased by 291% q-o-q or 16.2% y-o-y to RM7.0 million while turnover was up 17.3% q-o-q or 23.8% y-o-y to RM71.3 million. The sharp sequential increase in net profit was attributable to a low base in 4Q2008, when Aji's bottom-line took a hit due to higher selling expenses resulting from intensive sales & promotional activities. The continued improvement in bottom-line & top-line resulted from increased export to the Middle East as well as higher domestic sales.


Table 1: Aji's 8 quarterly results

Aji's sale has been rising steadily over the past 16 quarters, as shown by the chart below.


Chart 1: Aji's 16 quarterly results

Valuation

In term of valuation, Aji (closed at RM3.18 yesterday) is now trading at a trailing PE of 9.6 times (based on last 4 quarters' EPS totaling 33 sen) or at 1 times its Book Value of RM3.17. At these multiples, Aji is still fairly attractive for a growth stock.

Technical Outlook

Aji's gradual uptrend (SS) picked up pace in November last year and turned into the accelerated uptrend (S1S1). Aji has recently tested its May high of RM3.20 again. A failure to surpass this level means that Aji may have put in a temporary top. In the event of correction, Aji may pull back to the S1S1 uptrend line support of RM2.95-3.00. At lower level, we can expect horizontal line support to kick in at RM2.85 & RM2.70.


Chart 2: Aji's weekly chart as at Aug 17, 2009 (Source: Quickcharts)

Conclusion

Based on good financial performance & reasonable valuation, Aji is good stock for a long-term investing. Accumulate if the stock were to pull back to the RM2.80-3.00 level.