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MMODE BHD
BUSINESS BACKGROUND – SOURCE -
http://klse.i3investor.com/
M-Mode Berhad (M-Mode) is a Malaysia-based investment holding
company. Through its subsidiaries, M-Mode is engaged in the provision of mobile
contents and data application services with platform connected to mobile
network operators in Malaysia and China. As of December 31, 2009, M-Mode's
subsidiaries were M-Mode Mobile Sdn. Bhd., Mobile Multimedia Sdn. Bhd., Dalian
M-Mode Dreamfun Technology Ltd., Cede Communications Sdn. Bhd., M-Mode Media
Sdn. Bhd., M-Mode Systems Sdn. Bhd. and Beijing M-Mode Digital Technology Co., Ltd.
On June 4, 2009 and August 14, 2009, M-Mode acquired the remaining issued and
paid-up capital of M-Mode Media Sdn. Bhd. and disposed its 50% equity interest
in PT M-Mode Indo, respectively.
SUMMARY
MMODE share price taken a plunge since July 2014 and in my opinion it is a
good time to go long on this counter.
Why do I think MMODE is a good time to buy now? Here are why.
MMODE has 2 primary driver in my opinion which are
1.
Transfer from ACE
MARKET to MAIN MARKET
2.
Share buy back up to
10% of paid up capital i.e. 16m shares.
TRANSFER TO MAIN MARKET
MMODE had submitted the proposal to SC on 29th May 2014 and it
is expected to be completed by 3rd quarter.
Normally listed companies are expected to report their quarter result
within 2 months after their quarter ends. For e.g. if the quarter is 30th
Sep 2014, most companies will report their quarter result in second half of Nov
2014.
MMODE reported their Quarter 3 result on 17th October 2014,
which is more than 1 month earlier than previous years’ quarter 3 result
reporting as well as prior quarters. This strongly suggest that the approval
from SC to transfer to Main Market is imminent.
Since their Quarter 3 result came on17th October 2014, MMODE share price
rebounded from its low 48 sen to current as high as 58.5 sen on 28th
October 2014.
SHARE BUYBACK UP TO 10% OF PAID UP CAPITAL
Since 2012, MMODE had secure the mandate for share buyback.
This is not catalyst to share price appreciation, however it can at least
give comfort and security that if the share price drops too low MMODE may
execute share buyback to support the share price or to buy their share price at
cheap price.
Do remember that MMODE is holding on to MYR41m in cash. What are they
going to do with the cash? Share buyback or M&A?
INCOME STATEMENT ANALYSIS
·
MMODE revenue recorded
a tremendous growth in FYE2011 from FYE2010 from below MYR30m to MYR60m-MYR75m,
while its annual net profits hover around MYR11.7m –MYR13m since 2011.
·
MMODE’s FY2014 Q1 and
Q2 results were within expectation chalking up MYR43m in revenue and MYR6.2m
PAT.
·
However its Q3 result
reported a dropped in revenue as well as PAT declined by nearly 50% compared to
previous quarter. This had dragged down MMODE’s performance in FY2014.
ESTIMATED FYE 31st December 2014 NET
INCOME
·
In FYE2014 MMODE is
expected to record an increase in revenue by an estimated 12%, however MMODE
PAT is likely decline to MYR10.6m (vs FY2013 PAT @ 11.7m).
·
To continue to grow
modestly MMODE needs to maintain a gross profit margin above 30% and quarterly
revenue above MYR20m.
BALANCE SHEET
ASSET STUCTURE ANALYSIS
·
Balance sheet as of 30th
Sep 2014, grew modestly by 4% to MYR72.3m from MYR68.9m.
·
Key MMODE asset
component are
o
Notably MMODE has a
high cash reserves of MYR41.m which accounts for 57% of the total assets.
o
MYR10m in trade
receivables, nearly MYR1.4m increase from 31st December 2013
o
MYR8.3m in PPE, with
relatively small increase from 31st December 2013
o
Goodwill and
development cost account for MYR9.9m
LIABILITIES STRUCTURE ANALYSIS
·
MMODE is light on
liabilities with mere MYR5.9m total liabilities.
·
Majority of MMODE
assets were funded by its shareholders funds.
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Stock analysis and comments presented on klseelwavetrading.blogspot.com are solely for education purpose only. They do not represent the opinions of klseelwavetrading.blogspot.com on whether to buy, sell or hold shares of a particular stock.
Investors should be cautious about any and all stock recommendations and should consider the source of any advice on stock selection. Various factors, including personal or corporate ownership, may influence or factor into an expert's stock analysis or opinion.
All investors are advised to conduct their own independent research into individual stocks before making a purchase decision. In addition, investors are advised that past stock performance is no guarantee of future price appreciation
Investors should be cautious about any and all stock recommendations and should consider the source of any advice on stock selection. Various factors, including personal or corporate ownership, may influence or factor into an expert's stock analysis or opinion.
All investors are advised to conduct their own independent research into individual stocks before making a purchase decision. In addition, investors are advised that past stock performance is no guarantee of future price appreciation
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