Aji's net profit declined slightly

Ajinomoto (M) Bhd ('Aji') is involved in the manufacture & sale of natural flavour food enhancers. It has just announced its results for 2Q2009 ended 30/9/2008, where its net profit declined by 6.6% q-o-q or 8.7% y-o-y to RM5.6 million. This was despite improved turnover which increased by 10.6% q-o-q or 20.8% y-o-y to RM63.7 million. The drop in the bottom-line was attributed to higher input costs.



The valuation of Aji is quite attractive. Based on yesterday's closing price of RM2.25, Aji is now trading at a trailing PE of 6.4 times (using last 4 quarters' EPS totaling 35 sen). In addition, Aji is trading at a Price of Book of 0.77 times (based on its NTA per share of RM2.93 as at 30/9/2008). Aji's dividend yield is also very attractive at 6.7% (based on 15 sen dividend paid out for FY2008).

Chartwise, Aji share price has been drifting lower after making a recent high of RM2.72 in August this year. The share price is barely holding onto its medium-term uptrend line support at RM2.15-18. A break of this support could send the share price to RM2.00.


Chart: Aji's weekly chart as at Nov 18, 2008 (source: Quickcharts)

Aji is a defensive consumer stock. Based on good financial performance & attractive valuation, it could be a good stock for long-term investing.