Reason 1: Latest quarter earnings is the best in 5 years! (+14% QoQ and 113% YoY)

Its Q3FY2023 earnings surged 14% QoQ and 113% YoY to RM12.5 million. This is also the third successive QoQ earnings improvement for Apollo Food. Revenue increased 1% QoQ and 31% YoY to RM71.1 million. I believe the earnings improvement is due to reopening impact in which kids are back to school which will benefit the demand for Apollo Food's products (chocolate wafer and layer cake).

Reason 2: Beneficiary of cooling inflation

Q3FY2023 PBT margin was 17.6% which is an improvement from last year same quarter's 13.2%. Lower inflation will be good for Apollo as it will improve its margin after getting more time to pass on cost increase to its customers.

Reason 3: Net cash company

Balance sheet is super strong with net cash position of RM89.8 million. It has RM89.8 million cash and zero borrowings.

How much is APOLLO worth? 

RM6.75

67% upside!

I think one year, APOLLO can easily make EPS 45 sen.

The latest Q3 EPS was 11.83 sen and cumulative 9 months EPS was 17.53 sen.

Assuming Q3 EPS can sustain, then one year we will get about 47.32 sen. (11.83 * 4).

Round it down to 45 sen for easy calculation.

Use its average PE for 5 years and 33% discount to consumer sector PE of 20x, u get PE of 15x.

This stock is worth RM6.75.

Short Summary Of Apollo Food: A Warrant Buffett Type of Simple Business

Apollo Food Malaysia Berhad is a Malaysian company that produces and distributes food and beverage products. Established in 1992, the company began with peanut-based products before expanding to sauces, spices, and confectioneries. It has grown to become a leading manufacturer with a presence in different countries. The company caters to retail, foodservice, and industrial customers. It was listed on Bursa Malaysia Securities Berhad in 2011, enabling it to expand further. Apollo Food Malaysia Berhad focuses on innovation and sustainability to maintain its reputation for excellence.