MAMEE financial result update

>> Monday, August 30, 2010

FY30/6/10
Financial Result
MAMEE announced its 2Q10 result few days ago. For current quarter,
  • Revenue increase 17% to RM120.2m as a result of higher sales from local and foreign market due to effective advertising  and promotion activities and strengthening of distribution channels.
  • PBT stood at RM13.2m due to higher expenditure in selling and distribution, Advertising & Promotion for new products such as Mister Potato Rice Crisps and Mie Goreng Indonesia. 



For 6-months period, revenue increase 21% to RM235.6m. However, PBT only increase 7% for the same period to RM29.1m, due to higher selling and distribution expenses, and administration incurred.
Compare to immediate preceding quarter, revenue increase 4% on the back of greater demand. PBT 17% lower due to higher spending on sales and marketing.

Technical Outlook
MAMEE has been in my watch list since 10months ago, and the share price has been performed well as i expected. Since it broke above RM3.16, i make another call where price may hit RM3.85. However, it only manage to reach a high of RM3.75 on 23/7/10 before pull back.
Current support is RM3.30. As long as it stay above this mark, MAMEE should be safe.
Stock Valuation
MAMEE closing at RM3.35 is now trading at PE11.3X  (ttm eps RM0.297).With this PE multiple, i think MAMEE is reasonably cheap, given some positive prospects.
  • continuous improvements in selling and distribution channels to maintain and enhance the competitive position.
  • new products would contribute positively  to the group revenue growth.
  • board aware of the trend of increasing raw material cost and forex volatlity.
Overall
MAMEE has been fundamentally very strong for the last 5 financial year as my record. Its revenue as well as profit has been growth consistently. Company is in net cash position current assets keep increasing while total liabilities under control. Regular and generous dividend distribution is what investor after, and MAMEE has a good track record of that too.

All after all, MAMEE is a good company for long term investment. BUY on dip.

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