Maemode is testing its uptrend line at RM1.12

Background

Malaysia AE Models (“Maemode”) is involved in the designing, manufacturing, installation and marketing of material handling and conveyor systems and parts.

Recent Financial Results

Based on the last 4 quarters’ results, Maemode chalked up a net profit of RM13.6 mil on a turnover of RM309 mil. This represents an increase of 47% & 60% respectively over the topline & bottomline of the preceding 4 quarters.

However, it is noted that the current quarter’s performance has dropped when compared to the preceding quarter. Net profit has declined by 23% while turnover has dropped by 39%. This is likely to be attributable to the completion of a big contract in the preceding quarter.



Valuation

Based on the closing price of RM1.13 as at today & the EPS of 14.3 sen for the last 4 quarters, Maemode is now trading at a PE of 7.9 times. At this multiple, Maemode is still an attractive buy.

Technical Outlook

The share price has corrected some of its recent gains. Today, the share has actually tested the uptrend line at the RM1.12 level. We can see that the share also has some horizontal supports at RM1.13 & RM1.10. This could be a good entry level for Maemode.


Chart: Maemode's daily chart as at Jan 8

Conclusion

Based on undemanding valuation & nice technical set-up, Maemode could be a good investment.

Maemode's net profit jumped in QE28/2/2007

Background

Malaysia AE Models (“Maemode”) is involved in the designing, manufacturing, installation and marketing of material handling and conveyor systems and parts.

I've posted on Maemode on September 1st last year (go here) when it was trading at about RM1.13. Its share price has risen only marginally to about RM1.30/40 level.

Recent Financial Results

Its latest quarterly results for QE28/2/2007 has shown a marked improvement in its topline & bottomline. Its net profit jumped by 81.2% q-o-q or 21.0% y-o-y to RM6.7 million. This was achieved on a turnover which has increased by 36.4% q-o-q or 15.0% y-o-y to RM105.6 million. The improved topline & bottomline was mainly due to the better business performance of the oversea sales.



Valuation

Based on today (April 24)'s closing price of RM1.35 & the EPS of 19.1 sen for the last 4 quarters, Maemode is now trading at a PE of 7.1 times. On the other hand, if Maemode can maintain its last quarter performance going forward, it might record a full-year EPS of 28 sen. On that basis, the share could be trading at a PE of 4.8 times. At either multiple, Maemode's current valuation is undemanding.

Technical Outlook

The share price has been moving up slowly & supported by its 200-day SMA (currently at RM1.20). Overhead, it will encounter resistance at its long-term downtrend line at RM1.38/40. A break above this downtrend could mean more upside for this stock.


Chart: Maemode's daily chart as at April 24 (courtesy of Tradesignum.com)

Conclusion

Based on undemanding valuation, Maemode is a good investment for the medium-term. A break about RM1.40 could signal further upside for the stock, making it a good trading BUY.