APOLLO: Strong Fundamentals Amidst a Neutral Technical Setup - Is It A Time To Buy?
Fundamental Outlook: Undervalued By 10%-15%
1. Earnings surge 27% YoY and 57% QoQ. This is due to strong improvement in sales by 24% YoY and 26% QoQ. Both domestic and export market outperformed. It seems like the new management is bringing the company to new growth by implementing proactive marketing strategy.
2. No dividend for this quarter. However, no dividend is announced this quarter.
3. Intrinsic Value is RM7.50 - This is by using 15x PE on estimated FY2025 Earnings Per Share of 50 sen. 15x PE is 33% discount to consumer sector PE of 20x. This is lower than previous Intrinsic Value of RM11.30 due to normalization of earnings from the peak in Q2 FY2024.
Company Background:
Apollo Food Malaysia is a leading confectionery manufacturer, specializing in producing chocolate wafers, layer cakes, and chocolate-enrobed products. Its operations focus on high-quality production, serving both domestic and international markets, with exports mainly to Southeast Asia, Africa, and the Middle East.
Technical Outlook: Neutral
The stock's outlook seems neutral with a moderate likelihood of moving upward, but the low volume and flat MACD suggest caution. A clearer direction would emerge with either a volume increase or a MACD crossover.
Volume: The volume appears low, which might limit any significant movement upward unless a volume spike occurs.
Moving Averages: The stock is trading close to the 50-day and 200-day moving averages. The 50-day average (6.68) is slightly above the price (6.60), which may provide short-term resistance. However, the 200-day MA is relatively close, and the stock is holding above it, which is a positive longer-term signal.
Bollinger Bands: The price is near the lower band, which may indicate a potential bounce upwards as it nears oversold territory.
MACD: The MACD is flat and trending slightly negative, which suggests a neutral or slightly bearish momentum. However, any upcoming cross could signal a reversal.