TECHNICAL AND FUNDAMENTAL ANALYSIS

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MFLOUR (3662) - Fundamental & Technical Analysis

January 16, 2019

Technical Analysis

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- MFLOUR entered downward trend since Feb, 2018.

- EMA 20/60/120 turned downward on Feb 28, 2018 and MFLOUR failed to re-bounce on May 16, 2018.

- MFLOUR bounced back and sustained above EMA20 with huge transactions volume.

- RSI and MACD are bullish and overbought on Feb 16, 2019.

- Resistance level, R2: RM0.977

- Resistance level, R1: RM0.773

- Support Level, S1: RM0.550

- Support Level, S2: RM0.452

 

Fundamental Analysis

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Liquidity Ratios

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a) Y2016-Y2017

- Decrease in current ratio due to cash and cash equivalent drop by RM113M

- Based on time interest earned ratio , MFLOUR EBIT able to meet interest payment by 4.79x.

 Solvency Ratios

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a) Y2015-Y2016

- Trade liabilities (BA/RC) increased by RM176M which reflected red flag in gearing level and unable to generate revenue to sustain operation disbursement and debt repayment.

b) Y2016-Y2017

- MFLOUR's debt outstanding improved by RM21M which caused Debt to Equity Ratio dropped by 0.01

- Third-party trade receivable decreased by RM70M which indicated slow down in sales proceed generations and losing market shares.

 Efficiency Ratios

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- Reduce in account receivable turnover ratio indicated slow in sales collection and MFLOUR will have a difficulty in cash flow. Thus, it need more short term financing to sustain their operation disbursement and trade settlement (Draw new loan to settle old loan)

- Higher inventory indicated slow in demand and MFLOUR need almost days to turn their inventory to sales.

- MFLOUR management need to further improve overall business efficiency.

 Profitability Ratios

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- COGS increased by RM31M in Y2015 which lead MFLOUR net income reduced significantly.

- However, Profit Margin & ROE decreased due to slow in sales.

Market Prospect Ratios

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- MFLOUR EPS has recovered in Y2016 and maintained 12.46 in Y2017.

- Thus, MFLOUR shares price might able to recover in future.

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