I covered the second listed company last week, you may read it here in case you missed the article. For this round, the third company will be revealed. It reportedly commands more than 80% market share in Malaysia (2016) and I'm very sure that almost all of us know or at least have heard of this brand before. It is Ajinomoto.
I will be talking about Ajinomoto Malaysia Berhad, not Ajinomoto Co., Inc. listed in Japan, which is the parent company of our subject.
As summarized from the annual report, Ajinomoto is primarily engaged in two major areas of activities, umami segment and food and seasoning segment. Umami segment comprises products that are derived from the fermentation process such as Monosodium Glutamate (MSG) and related products. The food and seasoning segment consists of products derived from the extraction and mixing process such as industrial seasonings, tumix and related seasonings. Other segment consists of industrial sweetener, frozen food and provision of services in relation to food industry.
67% of total sales were made in the Umami segment while the remaining 33% were from food and seasoning segment. For geographical sales, 62% were made in Malaysia, 14% from Middle East, and the remaining 24% were made in other Asian countries.
Keiji Kaneko, the current CEO and a few other directors previously serviced the parent company in Japan before being moved to Malaysia.
Besides Ajinomoto, other brands include Tumix, Seri-Aji, Aji-Shio, Aji-Mix, and sweetener PalSweet. According to the Star, one of the differentiating strategy for Ajinomoto is that it employs a large sales team to deal directly with buyers, aside from the distributorship model. Its direct sales employees deliver products directly to shop owners and the transactions are carried out in cash terms.
Having glanced through its financial highlights, the company has performed well without much volatility due to its strong branding in Malaysia. It is currently selling at a PE (ttm) of close to 20 which is close to its highest historical valuation ever.