This article first appeared in The Edge Financial Daily, on December 15, 2015.
Ajinomoto (M) Bhd (-ve)
SHARE price of Ajinomoto (Fundamental: 2.8/3, Valuation: 2/3) has risen by 41.8% since it was first recommended by InsiderAsia on November 4 last year. The stock closed 4.6% higher at RM7.90 yesterday.
InsiderAsia likes Ajinomoto for its market-leading position, defensive qualities and undemanding valuations.
A household name, “Ajinomoto” is also synonymous with Monosodium Glutamate (MSG), where it commands a staggering 90% market share in Malaysia. MSG contributes about two-third of the company’s sales with the balance from food and seasoning products.
Exports, mainly to the Middle East, accounted for 35.2% of its sales in FYMarch2015, up from 31.0% in FY2012. Ajinomoto also stands to benefit from lower commodity prices.
For 1HFY2016, net profit surged 43.1% y-y to RM22.7 million on the back of an 8.5% growth in revenue to RM189.5 million. The increase in profit margin was mainly due to higher sales and better profit margins from export sales.