Would You Buy MaeMode?

I made a quiz the other day: Would You Buy This Stock?

And reader valuelife made the following comments..

• Based on these data, Definitely NOT a Buy 4 me!!
  
  Net debt too high, capital intensive stock??
  
  Receivables showed big jump, helped by loans??

Sometimes if we take OUT the stock name, things can be rather clear. The underlining fundamental weakness in the stock simply stood out like sore thumb.

I will paste what Kenanga Research said about this stock!

• 1QFY09 in line. Revenue and net profit of RM127.8m and RM5.2m was 23.6% and 20.8% of our forecast respectively. Better results were driven by higher contract values being executed.
  
  QoQ, 1Q09 revenue rose 7.0% while EBIT margin improved to 10.2% from 8.9%, lifted by various cost efficiency measures taken to counter the rising cost environment. As a result, pre-tax profit was also higher by 19.2% even after accounting for higher financing costs (1Q09: RM4.1m vs 4Q08: RM3.2m).
  
  YoY, 1Q09 revenue surged 26.2% on the back of higher contribution from bulk material and warehousing logistics division which accounted 41% and 29% of group’s 1Q09 revenue . Both EBIT and pre-tax margin was stable at about 10% and 7% respectively. Net profit was however fl at at RM5.2m, mainly due to one-off expenses amounted to RM4.7m incurred in restructuring of loan facilities and higher tax provision.
  
  Construction for the Suqian plant in China is on track to meet first phase opening by 1Q2009. The plant when ready by 2011 will double group’s current capacity and lift group’s profile as a global player in the material handling business.
  
  No slowdown in coal exploration activities despite easing of commodity prices. Supply of coal is expected to remain tight with robust demand underpinned by developing countries especially China and India. Recent RM41.5m contract clinched for the construction of coal handling facility at Asam-Asam port should cement group’s position as the leading supplier in Indonesia. Management is confident that group is well positioned to secure more similar contracts in future.
  
  We continue to like Maemode for its China expansion and exposure in the higher end products including warehousing logistics and bulk material systems, which will drive a net profit CAGR of 22.7% for the next 3 years. With an order book of RM360m lasting up to 2010, group is still actively bidding for more than RM1b jobs which should further boost its order book given a historical 38% strike rate. Maintain forecasts and reiterate BUY with target price of RM1.58 based on CY09 PER of 6x.

Yes the stock name is MadeMode!

Past postings on MaeMode:

1. A look at MaeMode again

2. Mae, I hope I am not WRONG!

3. Reply to Mae, I hope I am not WRONG!

4. MaeMode Again

5. The Trade Receivables In MaeMode

Here's the full table highlighting MaeMode's recent performance.



Just for the record: MaeMode is at 1.17 and MaeMode warrant is at 17 sen.