HAIO – Fundamental Analysis (25 Mar 2015)

HAIO Analysis:-

Excel – http://1drv.ms/19PyXRz

Notes – http://tinyurl.com/nr8hftv

My View:-

  • Valuation:
    • 5Y DCF:
      • Good Scenario: 2.67 (Fair value uncertainty: MEDIUM)
      • Base Scenario: 2.35 (Fair value uncertainty: HIGH)
      • Bad Scenario: 2.06 (Fair value uncertainty: VERY HIGH)
      • Ugly Scenario: 1.81 (Fair value uncertainty: EXTREME)
      • At current price (2.32), based on RDCF, assumption of FCFF growth rate in the next 5 years is 3.7%.
    • Absolute EY%:
      • Trailing:
        • FY14 (EPS: 0.205) – Fair value 3.25 (Fair Value Uncertainty: LOW)
        • R4Q (EPS: 0.16) – Fair value 2.54 (Fair Value Uncertainty: MEDIUM)
      • Forward:
        • FY15 (EPS: 0.145) – Fair value 2.29 (Fair Value Uncertainty: HIGH)
        • FY16 (EPS: 0.163) – Fair value 2.59 (Fair Value Uncertainty: MEDIUM)
      • EPS applied to reach the current stock price (2.32): 0.146
    • Both models show that HAIO valuation is not attractive.
  • Despite the current slump in its earnings, coupled with the possibility of longer-than-expected effect from the strategy shift, HAIO’s attractive dividend will be the main catalyst for the stock.
  • Outlook remains challenging with biggest concern on the wholesales division due to the strong USD against MYR. With the USD still staying strong, the Group might face difficulty in sustaining the profitability in this division.
  • Low consumer spending sentiment is also a challenge, but I think this is short term. It is matter of time people get use to GST.
  • I will continue to hold HAIO as I believe that HAIO has the ability to overcome the challenges ahead.

Latest Financial – Q3 2015 Financial Report (24 Mar 2015) http://www.bursamalaysia.com/market/listed-companies/company-announcements/1911893

At the time of writing, I owned shares of HAIO.

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