MAMEE propose capital reduction and repayment

MAMEE share suspended for two trading days from 7th April 2011 pending for an announcement. Company gonna propose capital reduction and repayment....i call it "Privatization".

Company undertaking a selective capital repayment exercise under Section 64 to all shareholder, other than  Non-Entitled Shareholders.

The propose capital reduction and repayment will be funded by this 71.9% Non-Entitled Shareholder by way of an advance or/and borrowing.

Proposed cash repayment per share is RM4.39, arrive after consider 5days, 1month, 3months average price of MAMEE share. Based on MAMEE NTA of RM1.71, its propose price-to-book ratio is 2.57times.

The reason given by the board for this proposal is :
1. Concern about the trend of increasing raw material prices and forex volatility.
2. Substantial capital expenditure may needed to improve productivity and expand capacity.
3. Need higher borrowing, which will affect dividend payment capability in immediate term.
4. MAMEE share thinly traded.
    "lol, blame people don't stir up(goreng) the price "

All after all, MAMEE is a very highly rated company in my list. It doesn't disappointed me since i start researching them. Link.

I personally do not welcome this proposal, as we'll get kick out from a good partnership. However, MAMEE proposed cash repayment price RM4.39 is about 22% premium of closing price as of 6th April 2011(RM3.60). For the good faith of minority shareholder(28.1%) i think Non-Entitled Shareholder are generous and fair.

Read more...

MAMEE net profit down due to higher comodities?

FY31/12/2010
Financial Result
For the quarter under review, MAMEE revenue increase 21% to RM125.17m, compare to RM103.21m in 4Q09. Higher sales were recorded from local and foreign markets, due to effective advertising and promotion activities, as well as new product launch(Mr. Potato Rice Crisps).
However, PBT drop 35% to RM7.83m, compare to RM12.22m in 4Q09. Higher expenditure in selling and distribution, foreign exchange loss and higher provision for doubtful debts are to blame.

Commodities price had gone up so much during the past 12 months. Chart below are the price movement of the main ingredient of Mamee F&B products.

Wheat gone up 62%

Sugar gone up 46%

Palm Oil up 66%

With this, no further explanation needed why company's net profit are 30% lower despite higher revenue.

Technical Outlook
Mamee share price broke above RM3.59 with a good volume, deem to be bullish. However, it doesn't sustain for long as the crisis in Libya heat up. Follow by a disappointing financial result announcement. 
Support at RM3.42, Resistance RM3.60. Friday(25/2/11) closing at RM3.50, just under MA(50d).

Stock Valuation
Mamee EPS for current FY is RM0.294, is trading at P/E11.9x. With this multiple, i think downside is limited. Target price RM4.10(P/E14x).

Overall 
4Q10 financial result do not effect my impression of the company, which has good track record for the past 6 years(i only have 6 yrs data). With its average ROE of 14%, good balance sheet with piles of cash( RM52.9m) and growing shareholder equity, its a ACCUMULATE for me.

Read more...

MAMEE financial result update

FY30/9/10
Financial Result 
As expected, MAMEE had another good quarter. For the quarter under review:

• Revenue increase 7% to RM121.8m from RM113.8m in 3Q09. Higher sales from local and foreign market as a result of effective advertising and promotion activities and strengthening of distribution channel. Its new product, Mr.Potato Rice Crisps have stronger demand than expected.
• PBT stood at RM15.6m, compared to RM16.1m 3Q09. Higher expenditure of in selling and distribution incurred and Advertising & Promotion expenses during World Cup season and Hari Raya are the cause.
• Bottom line increase 3% to RM12.3m, compared to RM11.9m due to lower effective tax incured.

Technical Outlook
MAMEE share price has been consolidate since hit a high of RM3.69(adjusted) during 23/7/10. Support at RM3.28 while resistance at RM3.45. MACD crossover signal line(red) under 0, which is beautiful.
MA(14d) try to cross over MA(50d) as well as MA(100d). Can we see a golden crossover ahead?

Stock Valuation
Mamee EPS is RM0.309(ttm) is trading at PE11x(17/12/10 closing price RM3.41). With this valuation, i think Mamee is still cheap given its stable EPS and ROE growth rate.

Future Prospect

• According to Inter-Pacific Research, Mamee FY11 capex plans totaling RM100m. RM60m will be allocated for machinery with the rest for renovation / construction for:

1. Additional warehouse in Melaka~to increase warehouse capacity by 46%
2. New factory ~ to replace aging machineries with new models. 3 new modern lines to be added (produce instant noodle)with higher production capacity(1.5x faster). Company plan to reduce their labor relief (70% workforce consist of foreign labor at the moment).

• With the heavy plan ahead, company gross margin might suffer from increase depreciation and overheads cost coupled with increasing palm oil cost.

Overall
Mamee is a good company for long term investor. Its growing rate(look at the chat below) and generous dividend payout(twice a year) is what we after. With the announcement of expansion plan for FY11, i'm pretty sure company is doing well and they look for more.
Will dividend payout affected if they need money for capex FY11? Increasing palm oil cost shall be noted.

Read more...

MAMEE financial result update

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.

Read more...

MAMEE technically positive.

MAMEE try to break above RM2.18 resistant for a few times since new year, and succeed on 15/1/10 attempt, closing RM2.19. Ascending triangle forming, with resistant turn into immediate support.
With its good fundamental, it is time to ACCUMULATE.
TP: RM2.58

Read more...

MAMEE, will "double deck" your investment

Company Profile
MAMEE is a household brand nowaday since it incorporate in 1971.MAMEE accompany most malaysians childhood where we will not forget, and now is in more than 70 countries from new zealand to canada. Its has 5 main product range :
1.Instant Noodle > MAMEE
2.Snacks > DOUBLE DECKER, MAMEE, MISTER POTATO, CORNTOZ...
3.Chilled > NUTRIGEN
4.Confectionery > NICOLET
5.Beverages > CHEERS

Financial Result
For the last 5 yrs, MAMEE has been able to grow revenue consistently from RM277m(FY 04) to RM396m(FY08). Its EPS also steady at RM0.21~RM0.35, which translate to P/E of 6.2x~10.3x. FY09 9months sees a significant improvement where RM33.33 net profit recorded, highest for the last 6 yrs. P/Margin of 14% tells us that company has better control of operating expenses.Company net working capital also stood at RM1.02/share, which is very healthy.

Technical Outlook
Technical chat shows MAMEE is in uptrend.

Stock Valuation
With P/E of 7.4x, MAMEE is very attractive. EPS of RM0.30 in FY09 is achievable. TP RM2.40(EPS x 8.0x).With an average of 10% ROE, it is a plus. Any chance to explore into new market or product will push the revenue, so do the price further up.

Overall
Look at the positive 5 yrs track record, MAMEE is a very defensive stock. And very potential to become growth stock as well, most importantly it is organic growth. With its generous dividend policy and efficient management, just BUY and hold.

Read more...