MALEE – Free Bitter Fruit Juice for Shareholders for a Year

It seems like this year, Malee Group Public Company Limited (MALEE) will return to its usual net loss situation. Even though MALEE has been adjusting its funding and business structures along with new various kind of products, the bitterness of its current financial statement still exists.

MALEE faced 5.41 million baht of loss in the first half of 2018, and by the look of its third quarter performance, MALEE tends to miss the word “profit” again and the fourth quarter as well. The main causes of its loss are:

1. The fruit juice business still has not recovered, especially 100% fruit juice.
2. Domestic CMG has decreased.
3. Fruit Juice export still has not recovered, especially “coconut juice”.

 

In the past, MALEE has been recognizing its loss from new product exportation such as, cold brews fruit juice, granulated milk, fruit-cider Fizza (import from Vietnam), and imported personal beauty and care products from Kino, an Indonesian partners. Thus, increasing the cost.

On the bright side, MALEE has a chance to recover its business from potentially buying more estates, which could result in the recovering of “fruit juice market”. More importantly, MALEE will start to recognize the profit from its new product lineup, which could give a better outlook for MALEE.

 

According to the valuation, MALEE will start recovering and gaining profit again in 2019, but it will not be a full recover until MALEE can find new customers or new products to compensate the linear growth of coconut juice.

However, there is another obstacle for MALEE, which is the sugar tariff hike (2nd time), starting from October 1, 2019 – September 30, 2020 (according to the original plan of increasing every two years). But the effect would not be as much as the first time, since there have been adjustments from the first tariff hike.

 

As for the shares price, MALEE has survived its lowest at ฿13-14/share, but to return to its flourishing day is not an easy task when its P/E was as high as 40x. A lot of patience is required for shareholders to prevail this low time, but when it does, that will indicate the ending of MALEE’s low point.

Let’s just hold your breath and drink this bitter juice for the time being, think of it as bitter is healthier.