Friday, 18 April 2014

Mmode: Is It Time To Grab?

If I were to invest like what I did before year 2013, I'm 100% sure that I would have bought Mmode's shares at 56.5sen yesterday.

My investment motto that time was "every stocks that go down must come up". I like to pay attention to stocks that fall a lot.

Mmode's share price fell 30% in 1-2 months time and seems to have hit the bottom. At this "crucial" time, it is now proposing a transfer to main board!

Mmode is one of the companies that I watch more closely. Its business has something to do with the booming smartphones & tablets, and thus its financial results made a big stride for the last 2 to 3 years.

Nevertheless, its latest quarterly earning of FY13Q4 was terrible, but we know that there is a one-off deferred tax issue.

In fact, Mmode's revenue in FY13Q4 was its record high by as much as 25%. This means that it has more sales with likely more subscription from its digital contents provider, Mobile Paper.




I'm not familiar with this stuff but I guess if the Mobile Paper is that good, the subscription should be for longer term so this level of revenue might sustain.

When Mmode's share price dropped to 50sen and below from its high of 75sen, I was very tempted to grab some of its shares. However, I decided to wait for next quarter's result which will be released only in May.

The reason is because its profit before tax margin also dropped alarmingly in the last quarter.

Previously, MMode's PBT margin stays comfortably at around 20%, but it suddenly dropped to 10.9% in the previous quarter. Anyway, this might be due to some one-off special expense which I'm not aware of.

However, if this low margin continue, then MMode's share might worth only 50sen, not at least 75sen that I would hope for.

So for me, its upcoming financial result is vital. 




Anyway, I manage to resist myself from buying Mmode at 56.5sen, even though I know that there is a high chance that its share price can rise further up because of the main board transfer news, just like what has happened to Karyon.

Furthermore, Mmode is still a good company with a very strong balance sheet and cash flow. I feel that its margin and earning will be back on track as soon as the next quarter. Its management team should have done something to rectify it.

I don't know whether I am right or wrong for not picking up Mmode at this time. Only time will tell...

3 comments:

  1. Hi BD, time has proven you right for not picking up Mmode at 56 sen back in 2014. It's share price is at 42 sen now, much cheaper than before and it's profit margin for the last quarter showed improvement. It's revenue remains good, though I don't think there will be any significant growth, but gradual growth when the number of subscriber increases. So, it may worth to take a new look now.

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    1. For me the main problem of Mmode is lack of information, and I don't find its business appealing. Personally i will not subscribe to its service so it kind of prevents me from investing in it. But I have to admit that it is a clean and stable company. I feel that its share price has a good chance to go higher.

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