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[MBL] MBL - Muar Ban Lee

MBL is principally involved in the design & manufacture of oil-seed expellers and ancillary machinery for oil-seed crushing plants, plant set-up, sales & services and manufacture and sale of spare parts. MBL's products & services are mainly to customers from various sub-sectors of the palm oil industries.

FYE 31.12.2009

Revenue dropped a marginal 3.8% to RM39.7mil compared to RM41.3mil in the previous year; PBT/PAT for the year was RM8.8mil/RM8. 6mil compared to RM9.8mil/8.0mil in the previous year. EPS increased to 9.3sen compared to 8.7sen previously with its NTA improved to RM0.59sen compared to RM0.54sen previously.

Noted that MBL is debt-free and 40% of its NTA is represented by cash of RM0.23sen.

Projected FYE 31.12.2010

With increased global demand for edible oil, oleo-chemical product & bio-diesel, it is driving the majority of the world's tropical and sub-tropical countries to expand acreage of palm oil plantation. This in turn creates vast & unlimited opportunity for MBL biz to grow. MBL's future plans & biz strategy to maintain its competitive edge & strength in the industry includes:

· Further penetration into Indonesia, Nigeria & Papua New Guinea

· Expansion into markets in Central & South America

· Production capacity expansion

· Continuous product development & investment in R&D

· Diversification of product range (eg. Jatropha Oil Seed Expeller)

With increased production capacity, MBL projected a 14% growth in revenue for FYE 2010. With improved production & efficiency in costs controls, on the basis that the same PAT margin is maintained, it would result into a PAT of RM9.8mil ie. An EPS of 10.65sen. I am assuming an annual 5sen dividend (2sen higher than previous year), NTA would improve to RM0.63sen.

I was monitoring this stock ever since its public issue in Oct 2009 was over-subcribed by 35X. Its IPO was prices @ RM0.65sen and reached a high of RM0.81sen on listing. Thereafter, it slid down and traded rangebound RM0.56sen to RM0.60sen.

At current RM0.60sen share price, based on its projected FYE 31.12.2010 as above, that works out to be a PE of 5.6X and DY of 8.3% with an NTA of RM0.64sen !

At "projected" RM1.00 share price, PE works out to be only 9.4X and DY of 5.00%... still looks good !

I am eargerly awaiting their 1Q results !

Watch out the Stock and Receivable turnover ratio ........u know what I mean....haha
ha..ha.. ???
what's so funny here ?

instead of cynical remarks, perhaps a more constructive comment would have been appreciated..especially coming from someone who cliams to be extensively experienced in TA & FA !

first of all, i'm NOT a promoter of MBL.. neither am I a substantial shareholder. I have bought MBL shares based on my analysis and monitoring of the stock. I believe the stock has potential and is currently under-valued.

If you taken the trouble to understand its biz, you'd notice that they are NOT a trading company but a design & manufacturing company. Hence, when it comes to design & set-up of plants, which vary in time/length of contract term, the receivables & inventories will be in tandem with the time..ie. a longer period of receivables/inventories turnover.

The receivables and inventory turnover ratio is approximately 4-5 months, seemingly high BUT its normal for such a company ! If you were one of their customer, would you make immediate payment whilst contract in progress or delay a bit until you are comfortable that the plant being constructed is going to be in working condition. The contracts are short term contracts where payments would have been structered in such a way to cater for such a situation hence, and in normal short term contracts, recognition of revenue would be at the completion of the contract ie. tail-end and payments on receivables will be after that. It would aslo depend on the timing of the recognition of the said contract, ie. if it is recognised just before financial year-end, receivables will be outstanding showing a high turnover ratio.
Similar situation will be noted on its inventories. The inventories comprises of raw material/spare-parts and WIP. The high inventories is in tandem with the higher turnover. Higher level of spareparts to maintain customers orders due to higher plant set-ups and the higher inventories turnover is mainly due to plant anchillary machinery production and oil seed expellers based on orders received as per contract awaiting delivery as scheduled.
Most of their plant and machineries sold involves gear-boxes, and importation of these gear-boxes have certain lead-time for delivery which also contributes to the higher inventory turnover ratio. To me, the stock & receivable turnover ratio is within acceptable level.

Like I said, I have been monitoring this stock for some-time now and I pretty much like the industry they are in or rather the industry they are catering for.

Thanks ramsyll for an insightful look into this company. Although you made some good arguments on this company, it would seem that your prediction of RM0.80 by 31-May is unlikely to happen though, looking at the stock market trend. The counter has also been trading range-bound for some time now and would need something remarkable to move it, IMHO. The company's AGM will be on 24-May where they're expected to approve a final dividend of 3% single tier; Not bad, but probably not enough to move the price to RM0.80. Anyhow, it's just my opinion and I'm still learning like everyone else. Keep those insights coming!

nice prediction!..=)
Great prediction.......congrats!
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