KUALA LUMPUR: Affin Hwang Capital Research has initiated coverage on Ajinmoto Malaysia with a Hold rating and a target price of RM20.30.
The research firm said it likes the producer of monosodium glutamate for its brand name and 80% market share in Malaysia.
"Approximately 73% of sales are derived from the consumer segment, which include MSG products and flavoured seasonings. The remainder comes from the industrial segment whereby Ajinomoto sells functional savoury seasoning products to processed food producers," it said.
Affin Hwang noted that Ajinomoto's sales in Malaysia have grown at a compound annual growth rate of 5.3% over FY09-17, in tandem with the growth rate of F&B establishments and processed food sales volume.
It said that despite the company's dominant market share, there are growth opportunities on the back of more product offerings as the flavoured seasonings market is still fragmented and enjoys higher growth rate.
Affin Hwang Research is also positive on the export outlook as MSG consumption in Asia is expected to grow by 4.1% per annum over the next two to three years.
With products mainly exported to the Middle East and Asia, its certified "halal" product status will be an added advantage, it added.
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