By purely looking at the above result, the quarter net profit is not so good if compared to last year. What are the main reasons behind? Well, let us look into Note 11 below:
As expected, there is an unrealized forex loss of RM1.9M vs gain of RM 3.6M last year. It is due to the strengthening of MYR to other major currencies. If adding back the unrealized forex loss to the current quarter net profit, the core profit of the current quarter would be: RM 13234k+ RM 1938k = RM 15.2M (vs core profit of RM19348k - RM3624k = RM15.7M). So, the core business profit is almost flat.
Meanwhile, Management has guided that there is a marketing expense in Q3. Unfortunately, the exact amount is not disclosed. Similar question has been asked to the Management during AGM; however, no exact numbers coming from them... Not sure why it is so secretive.
Overall, the current Q3 result is not bad. If no marketing expenses, I guess the overall core profit would be higher than last year.
At the time of writing, Iran war is happening in the Middle east. I believe the freight cost to Jeddah (Saudi) would be higher, affecting the profit of AJI in near term. As a result, Market has realized this and sell the shares beforehand. I choose to hold, as the current share price is still below my calculated intrinsic value.
Frankly speaking, I feel bit sad as all my paper profit evaporated due to the heavy selling. Who wouldn't, right? But, this would definitely happen to any serious investors in their long investment journey, I believe.
Hopefully the Iran-US-Israel conflict would be resolved soon.
