Results Update

Mamee has just announced its results for QE31/3/2010. Its net profit increased by 16.2% q-o-q or 13.6% y-o-y to RM12.0 million while turnover increased by 11.9% q-o-q or 26.0% y-o-y to RM115 million. The improved performance was attributable to higher sales, both domestically & overseas, and the return to profitability for its Chinese subsidiary.


Table 1: Mamee's last 8 quarterly results


Chart 1: Mamee's 16 quarterly results

Valuation

Mamee (closed at RM2.78 yesterday) is now trading at a PER of 9.3 times (based on the last 4 quarters' EPS of 30 sen. At this multiple, Mamee is considered quite attractive.

Technical Outlook

Mamee has been in an uptrend since November 2009. Its uptrend line accelerated twice, from SS to S1-S1 and then S2-S2. In the past 2 weeks of market selloff, Mamee broke below its accelerated uptrend line, S2-S2. It may consolidate further & may test the 20-week SMA line at RM2.76 or the next accelerated uptrend line, S1-S1 support at RM2.70.


Chart 2: Mamee's week chart (on Log scale) as at May 26, 2010 (Source: Tradesignum)

Conclusion

Based on good financial performance & attractive valuation, Mamee could be a good stock for long-term investment. However, after a strong rally- punctuated by a breakdown of its immediate accelerated uptrend line- and the current uncertainty in the overall market, one should be more circumspect about buying into Mamee in a substantial manner for now.