Mamee is one of my favorite consumer stock. I highlighted this stock in August 2009 (here). Since then the stock has rallied very strongly. Its financial performance has been very satisfactory over the past 22 quarters (see Chart 1). However, we can see that the bottom-line seems be stagnant over the past 5-6 quarters despite steadily rising top-line. From the table below, we can see that Mamee's net profit dropped 11.7% q-o-q or 1.0% y-o-y to RM10.6 million while turnover was 4.2% q-o-q or 16.8% y-o-y to RM120.2 million. The company attributable the slide in net profit to higher spending on sales & marketing.
Chart 1: Mamee's last 22 quarterly results
Table: Mamee's last 8 quarterly results
Technical Outlook
We can see that Mamee looks very toppish. If the 10-week SMA line were to break below the 20 or 40-week SMA lines, the stock is likely to enter into a bearish phase. Look at the indicators which are all pointing towards weakness ahead.
Chart 2: Mamee's weekly chart as at Nov 10, 2010 (Source: Tradesignum)
Conclusion
Based on weakening technical outlook & slide in its bottom-line, Mamee's share price could be peaking. To be sure, we should look for a negative crossunder of the SMA lines (as discussed). Until then, you should avoid this stock.
7 comments:
hello
mr. alex..kindly comment about perisai stock based on FA and TA.
Hi Kiwi,
Perisai has tested the horizontal resistance of RM0.60 this morning. If it can break above that level, its next resistance is at RM0.63 & then at RM0.70. The momentum is picking up.
Please check on Bursa website on the company's performance.
Dear Alex,
Would you comment on another F&B stock, Ajinomoto which was traded at single digit PE before the share price moved last two days.
Dominant in MSG market, stable business, moderate growth, zero debt, about 5% dividend yield, some amount of cash in hand.
It looks attractive.
Thank you.
Goshh look at Masterskill...is there a reason for the drop??? imagine if ppl still holding it since IPO...wat's going onnnnnnn.......
Hi Alex,
Is it safe to buy Masterskill at RM2.30-RM2.35 ?. TQ
On Masterskill, have bought in high price, what to do now? sell for cut lost or buy in to cover losses?
Hi mytynat, Stephanie & Yick
MEGB is going for another test of the low. This time the low is RM2.25 recorded on Nov 8. Presently, it is at RM2.26.
Given the current market condition, it is advisable to let the market action guides you. That means letting the stock rebound sufficiently before buying (say a level of RM2.35).
However, technical analysis is not the only guide here. You must also be aware of the selling by a major shareholder, FMR LLC ( here ). This shareholder is determined to get out and it still has 35 million shares to sell.
With the overall market at a tipping point, it's advisable to be more careful & avoid trying to catch a falling knife.
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