Strategic Divestment Fuels Growth. Muar Ban Lee Group Berhad (MBL) has demonstrated a noteworthy recovery in its FY23Q3 financials. The group's strategic decision to divest its 51.0% stake in PT. Serdang Jaya Perdana for RM11.0 million marks a significant turn, effectively eliminating a low-return asset and optimising cash flow. This divestiture contributed to a normalised revenue base of RM74.58 million, with the core manufacturing business contributing RM51.97 million. Notably, MBL's plantation segment, still in its nascent stages with an immature durian plantation, has yet to generate revenue.

Diverse Revenue Streams. MBL's automotive division, with operations in Muar (4S), Langkawi (3S), and Kulai, has bolstered the revenue mix, contributing RM28.18 million. This diversity, especially with the trading division still in its early stages, positions MBL for a more resilient financial future.

Agro-Industrial Diversity and Sustainability. MBL's operations span a palm kernel crushing plant for palm kernel oil, a copra plant for coconut oil, and a solvent extraction plant for oil extraction. Complementing these are its sustainable projects: the EFB biogas plant utilising palm oil waste for energy, and the POME water treatment system for wastewater management in palm oil mills. This blend of diverse agro-industrial activities and eco-friendly initiatives showcases MBL's commitment to both business growth and environmental responsibility.

Strong Profit Performance. The group recorded an impressive Profit After Tax (PAT) of RM4.98 million, a significant 62.5% increase from the previous quarter. This surge is attributed to the increased demand in its manufacturing division.

Promising Business Outlook. MBL's sizable order book and an encouraging business environment signal a robust path ahead. Projecting this momentum into FY24F, with a forward EPS of 8.52 and a modest 10x Price-Earnings Ratio (PER), adjusted with a 10% discount, places MBL's intrinsic value around RM0.77. This valuation indicates a potential upside of 40.25%.

Positive Market Anticipation. With a strong foothold in the palm oil seed crushing equipment sector and currently undervalued market pricing, MBL stands out as an optimistic investment choice. The group's strategic refocusing and diversified business operations suggest a promising trajectory ahead.