Why i think MFLOUR stock price will fly higher in coming QR announcement ?
Flour and grains trading segments recorded higher operating profit, amounting RM30.8 million and RM8.2 million.
The raw material wheat price was stable during Oct 18 until Feb 19 timeframe, but then drop dramastically during Mar 19. This will help to improve the profit margin.
However, with the help of MYR strengthening against USD, this greatly help to improve the profit margin.
MYR has been strengthening from ~ 4.17 to today 4.07.
live birds price increase and helps on the profit margin. If you compare the live birds price for Q4 2018 vs Q1 2019.
Live birds price is averagely higher ~ 5.8 per kilo at Q1 2019 compare to ~ 4.8 per kilo Q4 2018.
That is whooping 20% increase in terms of profit margin.
Ruppiah strengthening from Q4 2018 ( ~the lowest 15,400 Ruppiah ) to to date 14,141.55 Ruppiah. This situation lead to lower import of feed or raw material cost for Mflour.
So, all segment are shoing improvement for the period Jan 2019 ~ March 2019 compare to Q4 2018. And if Q4 2018 EPS is 3.02sen, i expect the Q1 2019 EPS to be above 4sen.
If we assume a 4 sen EPS for coming Quater, and sum up last 3 quarters earning, we have ( 4 + 3.02 - 0.94 + 0.87 ) , which is equal to 6.92 sen. With PE 15 , the stock price should be RM1.03.
What will the stock price to be if the earning remain about 4~5sen 2 quarters after next quarters ? Assuming Q3 2019 is 4.5sen and Q4 2019 is 5sen EPS, we have ( 5 + 4.5 + 4 + 3.02 ) which total 16.52sen and with PE15 , the stock price should be RM2.47.
Not to mention what will the earning will be when all the expansion of capacity completed. This further boost the revenue and profit of the company.
Please note CCK is trading at PE 14.7, QL is trading at PE 50, Layhong is trading at PE48.
So PE 15 is consider reasonable for a consumer poultry stock.
Lastly, grab your chance to come on board on MFLOUR train towards RM2.00 by end of this year.
