APOLLO FOOD HOLDINGS BERHAD [S] Evaluation

Apollo is a long time snack manufacturer which is well established in Malaysia for decades. It is also well known among the locals be it children of school ages or even adult. It has a strong branding built by its unique and delicious recipes snack. Apollo further strengthens the image of its snack by sponsoring several cartoon broadcast on local broadcasting centers gaining popularity among the children. This has driven Apollo steps ahead of its competitors in term of positioning their products into the consumer’s mind.

However, recent entries of local and international snack manufacturer have made the industry tougher than ever. Therefore, continuous development of new flavor is conducted to go beyond its consumers’ expectation. On the bright side, Apollo is able to retain its customers’ loyalty by its existing product lines. Internally, rising utility cost such as electric and transportation will be a burden for the industry. Even the purchase of main raw ingredient such as sugar used to be subsidized is burdensome.

First of all, free cash flow shows a gradual upward climb for the past ten years with an annual compounded growth rate of 15.76%. Next, both ratios are showing satisfactory return at 13% and 14% respectively which reflect an efficient company. At the same time, the company is cash rich with RM64 million where no huge drawdown of loan is needed to maintain its daily operation and even expansion in turn eliminate interest expenses. With its book value of RM2.87 and current price of RM4.8, it is still worth it with the company cash position. Also, PE of 12.3 tell us that the market price of the equity is not over expensive which is affordable. In short, it’s a potential company.

Stock: APOLLO Code: 6432 Company: APOLLO FOOD HOLDINGS BERHAD [S]