Thursday, December 18, 2008

Review of HaiO's Latest Quarterly Earnings

Hai-O reported its earnings tonight.

Net earnings came in at 10.889 million.

If you look at the above summary from Dow Jones newswire and compare it versus the same period last year, Hai-O's earnings is looking marvelous! Simply superb!

However, looks can be very deceiving.

It was just in Sept 2008, I made the following posting, Short Note On Hai-O Earnings


  • Quarterly earnings was at 13.602 million, which is a huge worry, for its previous quarter in June 2008, HaiO reported reported earnings of 18.942 million.

Which means, if one looks at the very immediate picture, HaiO's earnings are deteriorating at an extremely tremendous pace. The last three quarters, its earnings has went from 18.942 million to 13.602 million to only 10.889 million!

This is alarm bells for me!

And if one sole reason to buy HaiO was because HaiO because of its growth story, well its growth story is no longer there. So would one's justification to hold this stock remain true?


I took a quick look-see at some important yardsticks in its balance sheet. I wasn't impressed.

Compare the cash/short term investments versus the same period last year. Impressive?

Want to compare to previous quarter,
Quarterly rpt on consolidated results for the financial period ended 31/7/2008?

And yes, HaiO's debts is growing slowly but surely!

Now when you compare these debts to the posting I made on HaiO back in April 2008,
Review Of Hai-O

Look at the table posted again.

Compare those ttm numbers versus what we are seeing now. Like what you see?

And here is HaiO's attempt to explain why so terrible.

  • Material changes for the current quarter as compared with the immediate preceding quarter

    For the second quarter under review, the Group recorded lower profit after taxation of RM 11.15 million as compared to the immediate preceding quarter of RM 13.58 million. The lower profit was mainly attributable to lower revenue achieved by the MLM division, due to the Ramadan festive season in the second quarter which had slowed down the sales activities. However, the retail division had recorded higher revenue and profit as compared to the immediate preceding quarter, contributed mainly by the success of its members’ sales promotion and higher margin contribution from its house brand products.

And this is what the company is now saying about its current prospects.

  • Due to the current global financial turmoil and weak market condition, the Company had revised downward its growth rate from 20% to 5% as mentioned above. However, the Company will strive for better performance in this challenging environment and work towards higher growth rate.