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Singapore’s Big Winner for the Week: Mewah International Inc

Mewah International Inc (SGX: MV4) has surged by 4.1% since last Friday to close at S$0.385 yesterday. Singapore’s market bellwether, the Straits Times Index (SGX: ^STI), was unchanged during the same period, making Mewah a big winner this week.

Mewah is a global agri-business with refineries and processing facilities in Malaysia and Singapore. Its products include palm oil, soft and lauric oils, speciality oils and fats, and consumer pack products.

On 14 November 2014, the firm released its third quarter results and saw its quarterly revenue grow by 16.9% year-on-year to US$730.5 million. The increase was mainly due to a jump in sales volume from 933,000 metric tons to 1.089 million mt.

Net profit for the quarter was at US$1.3 million, a huge 63.5% plunge from the profit of US$3.6 million seen a year ago. The poor showing was mainly due to increases in selling and distribution and finance expenses. Higher freight charges had caused Mewah’s selling and distribution expenses to rise by 40.6% to US$37.8 million.

Looking at the balance sheet, as of 30 September 2014, Mewah’s net debt-to-equity ratio stood at 0.55. That’s an increase from the ratio of 0.36 seen at the end of last year.

Investors hoping to see a better performance from Mewah in the near future might have reasons to be disappointed given the company’s comments in the earnings release:

“Bumper production of soy bean, outlook of low energy prices and high stock levels of global vegetable oils are expected to keep prices of major vegetable oils low. Challenging conditions for palm oil refiners are expected to continue in the short term and the Group will remain focused on managing the business prudently participating in the trade flows selectively.

Group remains optimistic for its long term prospects as it continues to be competitively positioned in the palm oil value chain with large scale strategically located integrated refineries, well established brands and robust customer base. With its recent investments in additional refinery, dairy manufacturing facilities, biodiesel plant and rice business, the Group has further strengthened its competitive position in the industry.”

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Sudhan P does not own any companies mentioned above.