For those investors who now want to take a bit of a contrarian view on the US$ currency and global oil prices -and so think the selling on this stock price is overdone why not take a look at MBAX, around 3 Baht just now.

This MAI stock has dropped from 5-6 Baht at mid 2007, mostly because it exports (70%) to USA and that currency has been in the doldrums.  Also on sky high oil prices -as the raw material is polyethylene terephthalate (PET) which is linked to oil prices.   If oil prices drop and/or the dollar turns around so should MBAX's oversold stock!  USA no longer produces these kind of bags must so import all this, according to a local Thai newspaper.

MBAX produces a variety of plastic bags, made to order bags for waste, food and fruits and vegetables.  You can see this at www.multibax.com [2] 

The company as of recent has focused on developing new products that have high profits per unit and into countries where it has little competition.

MBAX can compete well with China producers as it has higher production efficiency, standardized product and a low tax rate.

MBAX has a warehouse and three plants with a combined production capacity of just about 30,000 tons a year. As this company is located in the Export Processing Zone, MBAX is also excepted from import and export tarrifs., as well from the 7% VAT tax.

There has not been much insider buy/sell activity over past months, except for a large insider buy of 1,150,000 shares at 4.25 by its Chairman Mr. Vorapot Simahachota.  From I know management has a good reputation and is capable.

Sales have continuously increased last year, but profit margins got squeezed. Here is how mgt. explained it to the MAI exchange:

"The higher sales, meanwhile, higher cost of goods sold to sales due to increasing of polyethylene resin prices and wages in quarter 3 of2007, resulted to gross profit margin reduced by 16.19 million Baht. However, because of decreasing of selling and administrative expenses, interest expenses and increasing of other income, resulted in lower net profit by 8.35 million Baht for the 3 month period ended November 30, 2007 compared to the same period last year, accounted for a decrease of 37.26 percent."

You can see more about MBAX at this main MAI link:

http://www.mai.or.th/mai/companyAllInfo.do?symbol=MBAX [3]

I think the next dividend yield on current market prices of around 3, could well be around 10% or far more then double the SET averages. Hence I rate MBAX as another turnaround stock at current levels, as I did on LVT back around 1.40 mid last year.  Obviously one has to believe the US$ drop could now stabilize along with global oil prices dropping, on the latter trend I already indicated what I think in my New Year report to you.  Either way, MBAX looks cheap to me trading right around its book value.

Best Regards,

Paul A. Renaud.

www.thaistocks.com [4]