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Wednesday, November 29, 2017

MBL: Earnings Continued to Rise

Results Update

In QE30/9/2017, MBL's net profit increased by 17.8% q-o-q or 34.0% y-o-y to RM3.3 million while revenue increased by 8.6% q-o-q but declined by 7.6% y-o-y to RM50 million. Revenue increased 8.6% q-o-q due to increased revenue from both the Oil Milling and Trading & Services divisions which more than offset the lower revenue achieved by the Manufacturing division. Similarly, the lower PBT of the Manufacturing division was more than offset by higher PBT achieved by both the Oil Milling and Trading & Services divisions. The performance of the Manufacturing division was affected by lower project sales. Better performance for the Oil Milling division was attributed to higher average selling price and higher production output of CPKO, while better performance for the Trading & Services division was due to the income recognized to the extent of the completed project works.


Table: MBL's last 8 quarterly results


Graph: MBL's last 28 quarterly results

Note:

The company's plan to dispose of its oil palm plantation company, Sokor Gemilang Ladang Sdn Bhd for RM35 million was not successful as the MOU expired and lapsed in September 2017. Currently the main business operations of MBL is Oil Milling and Manufacturing of Oil Seed Crushing machines.

Financial Position

As at 30/9/2017, MBL's financial position is deemed strong with current ratio at 3.4x and gearing ratio at 0.4x.

Valuation

MBL (closed at RM1.33 yesterday) is now trading at a trailing PE of 10 times (based on last 4 quarters' EPS of 13.65 sen). At this multiple, MBL is deemed fairly attractive.

Technical Outlook

MBL appears to have broken above the line connecting the recent peaks, AB at RM1.15. This upside breakout may lead to the next upleg for the stock.


Chart: MBL's weekly chart as at Nov 28, 2017 (Source: Malaysiastock.biz)

Conclusion

Based on good financial performance and position, fair valuation & mildly bullish technical outlook, MBL is a good stock for long-term investment.

Note:

I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision.

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