Ajinomoto up as much as 2.75% on report it is undervalued

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KUALA LUMPUR (Nov 5): Ajinomoto (Malaysia) Bhd shares rose as much as 16 sen or 2.75% today to a high of RM5.98 on the heels of a TheEdge Research Insider Asia's Stock Pick report featured in the Edge Financial Daily yesterday, which said the stock was undervalued.

"There is one consumer stock that is overlooked by investors and trades at under half these valuations - Ajinomoto (M) Bhd," read the article.

The report said Ajinomoto is currently trading at just 1.3 times book with trailing 12-month price earnings of 12.5 times, which is below the broader market's average.

As at 3.14 pm today, Ajinomoto, which has been trending downward since October, is at RM5.95, up 13 sen or 2.23%, with 4,000 shares done.

Ajinomoto started as one of the very first Japanese joint venture companies in Malaysia, and manufactures monosodium glutamate, which it is renowned for, as well as salt, pepper, sweetener and instant soup.

Between FY March 2010 and FY2014, revenue had increased from RM284.6 million to RM345.5 million, while net profits had risen from RM23.9 million to RM28million.

"For the first quarter ended June 30, 2014 (1QFY15), revenue decreased slightly by 1.8% to RM86.2 million while net profit fell 1% to RM8.2 million due to higher advertising expenses; potential earnings growth drivers include lower key raw material costs and its new Tumix range of flavour seasoning," said TheEdge Research.

The article also added that the company's dividend payout ratio has been consistently above 40%, and that in FY2014, dividends totaled 18.5 sen per share, which translates to a yield of 3.2%