Ajinomoto (Undervalued)

Ajinomoto is valued for its strong brand names, steady earnings and dividends.

Nestle, F&N and DLady are commanding at a premium valuations, with the three stocks trailing 12 month PER of between 21 and 29 times and price to book ratio of between 3.6 times and 22.2 times.

However Ajinomoto trades at under half of these valuations. It is currently trading at just 1.3 times book with trailing 12 month PER of 12.5 times.

Between FY March 2010 and FY2014, revenue increased from rm285 million to rm346 million while net profit rose from rm24 million to rm28 million. In 1QFY2015, revenue decreased slightly to rm86.2 million or 1.8% while net profit fell to rm8.2 million or 1.0%. Potential earnings growth drivers include lower key raw material costs and its new Tumix range of flavor seasoning.

It has a strong balance sheet with net cash holding of rm106.7 million as at 30 June 2014 or rm1.75 per share.