Ajinomoto’s export revenue could face some pressure in near term

KUALA LUMPUR: Ajinomoto (Malaysia) Bhd’s (Ajinomoto) export revenue could face some pressure in the near term, analysts project in a results note.

As per Ajinomoto’s latest financial statement, the group’s profit for the first half of financial year 2019 (1H19) amounted to RM26.7 million, up from RM24.4 million in the corresponding period of the preceding year.

Earnings per share for 1H19 was at 43.92 sen, up from 40.14 sen in 1H18.

Meanwhile, revenue for the period amounted to RM213.1 million, a slight increase from RM211.8 million in YTD ended September 30, 2017.

According to Affin Hwang Investment Bank Bhd (Affin Hwang), the group’s 1H19 revenue growth was flat on a year on year (y-o-y) basis as the five per cent gain in domestic revenue was offset by a decline in revenue in the export markets (particularly the Middle East and other Asian countries). This had been due to the stronger ringgit against the US dollar on a y-o-y basis.

Looking ahead, Affin Hwang adjusted its financial year 20192021 (FY19-21) earnings per share (EPS) forecasts by 3.2-1.6 per cent mainly to account for slightly lower revenue for the export segment.

“While we believe the domestic marketcouldbenefitfromtailwinds arising from improving consumer sentiment and spending, export revenue could face some pressure especially in the near term given our in-house forecast of a stronger ringgit,” the research firm said.