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.