Tuesday 21 June 2011

HaiO: Time still Tough

Once a darling stock for both institutional and retail investors for its attractive dividends, HaiO has since dramatically fallen out of favour. After reaching a high of above RM10 for its share price in early 2010, HaiO gave away 5:1 bonus issue and implement 2:1 share split to about RM4.3. However after this, the share price headed south, coincided with a series of poor financial results beginning from 2010Q4 (quarter end July 2010).

The poor financial performance is mainly caused by the network marketing arm, though I'm not sure what is actually the problems.

HaiO quarterly results:
Rev (Profit) RM milQ1Q2Q3Q4FY
2010148 (18)132 (20)131 (18)99 (14)511 (71)
201155 (8)53 (6)58 (6)

For the whole FY2011, the revenue and net profits are significantly lower than previous year. So when the quarterly results were announced in the media, it sounds like this: HaiO's Revenue & Net Profit drop 60-70% QoQ. So the consequences... please refer chart below.

       HaiO: a big mountain

Each time when HaiO announced the bad results, the share price will take a significant dive the day after, as shown in blue arrows. The price plunged from RM4.7 to RM2.15, down more than 50% like its financial performance in 15 months.

HaiO is going to announce its 2011Q4 results soon this month. What we are likely to see is: HaiO revenue & net profit slide 60% in FY2011 YoY. How will investors respond? Three months ago, the response was not that bad compared to previous ones, perhaps they are well-prepared for it.

Three months later in September when the 2012Q1 result is out, we are likely to see headlines like: HaiO net profit increases xx% QoQ. So will the share price bottom out after this?

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