Ajinomoto (M) Bhd is the Malaysia-arm of Ajinomoto Co. Inc. The Japan-based parent still owns about 50.08% of the company. Ajinomoto (M) has been producing monosodium glutamate (MSG) in Malaysia since 1964 and has been listed on Bursa Malaysia since 1970.

The company is most well-known for its “Aji-no-moto” brand of MSG. The company continues to control about 80% of Malaysia’s MSG market. Ajinomoto (M) Bhd derived most of its revenue locally from Malaysia but the company does export some of its products to other Asian countries.

Key Opportunities

Ajinomoto (M) Bhd continues to provide consistent earnings and revenue for shareholders. Given the large market share the company controls in the MSG market locally, its revenue is very defensive. Moreover, the company has been able to able to grow its revenue at 3.6% annually since FY2010 and grow its operating profit by 4.4% compounded annually over the same period.

Lastly, the company has a strong history of paying out its dividend. It has been paying out a growing and consistent dividend since FY2001. That is a history of 15 years of growing dividend for its shareholders, an amazing achievement.

Risks

The company is not without risk. The very fact that the company is still very dependent on its MSG sales shows that the company has been unable to diversify its revenue away from its main product. Secondly, as the global population becomes more health conscience, demand for products such as MSGs might not grow forever. Lastly, the company is mainly focused in the Malaysia market, as a listed subsidiary of the corporation in Japan, which is a limited market for the company. This might be a ceiling on the future growth of the company.

Below are the past 3-years financial statements of the company.

 aa bbSource: Capital IQ

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The information provided is for general information purposes only and is not intended to be any investment or financial advice. All views and opinions articulated in the article were expressed in Stanley Lim’s personal capacity and do not in any way represent those of his employer and other related entities. Stanley Lim does not own any companies mentioned.

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