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5 things I learned from the 2021 Ajinomoto Malaysia AGM

Ajinomoto (Malaysia) Berhad set up its business in Malaysia in 1961 and subsequently listed on the stock exchange in 1968. It produces and distributes monosodium glutamate and food seasoning products like chicken stock and pepper under various brand including AJI-NO-MOTO®, Seri-Aji®, and AJI-SHIO®.

It has two business segments, namely the consumer segment (that targets the general public and the food service sector) and the industrial segment. Its customers from the industrial business segment are typically food manufacturing players that produce processed foods like instant noodle, soup, and sauce.

Here are five things I learned from the 2021 Ajinomoto Malaysia AGM.

1. Revenue decreased 4.0% year-on-year to RM443.1 million in 2021 because of lower sales volume recorded in the consumer business segment in both domestic and export markets. Net profit excluding non-operating items suffered a larger year-on-year decline at 10.1% to RM46.5 million due to lower revenue and higher advertising expenses. Likewise, dividend per share was down from 49.30 sen in 2020 to 38.25 sen in 2021. The dividend payout ratio has remained stable at around 50% over the past five years.

2. Ajinomoto Malaysia adjusted its marketing strategy amid the lockdowns. It ramped up its digital presence via social media and e-commerce platforms like Lazada and Shopee to drive the sales of its products that are for in-home consumption. Many of its business customers like restaurants operated at limited capacities during the lockdowns according to executive director Noriko Fujimoto. Revenue from the food service sector contributed to a big chunk of the revenue of the consumer business segment. Similarly, revenue from the Middle East region dropped from RM73.7 million in 2020 to RM59.5 million in 2021.

3. The company has spent RM355 million on its new plant in Techpark@Enstek, Bandar Baru Enstek, Negeri Sembilan. The plant will be completed by 2022 as the construction activities were delayed by various phases of lockdowns. The expansion will leverage Techpark@Enstek as a halal hub to further solidify the company’s position as a halal food manufacturer and expand its reach to more Islamic nations. Company secretary Chua Siew Chuan responded to Minority Shareholder Watch Group (MSWG) that the production capacity of the new plant will be at least 20% to 35% higher than that of the old one. Solar panels will also be installed at the new plant to achieve some cost savings. The annual depreciation charges on property, plant, and equipment will increase by between RM10 million and RM50 million.

4. Chua also clarified to MSWG that Dato’ Setia Ramli bin Mahmud, who was retiring after the AGM, would be given proposed gratuity payment amounting to RM124,000 in alignment with the company’s remuneration policy. The information was not disclosed in the Notice of AGM. Ajinomoto Malaysia has been practising this gratuity payment to directors who resign or retire for quite some time. The amount of gratuity payment proposed this year was not significant compared to its revenue and net profit.

5. With regard to the recent increase in freight and transportation costs, Ajinomoto Malaysia will try to absorb the cost increase as much as possible until it reaches a certain threshold. The company also has enough inventory and does not face any raw material shortage issue.

The fifth perspective

Despite Ajinomoto’s efforts to brand its products as naturally sourced and healthy, its products are sometimes perceived negatively by consumers in this region. There may not be a lot of growth from in-home consumption of its products. It is worth monitoring the potential growth in revenue from the food service sector as well as the industrial segment.

Liked our analysis of this AGM? Click here to view a complete list of AGMs we’ve attended »

Shak Chee Hoi

Chee Hoi is an investor and research analyst at The Fifth Person. He was previously involved in wildlife conservation work with a non-governmental organisation as well as sustainability consultancy work. He personally believes in impacting society and the environment for the greater good.

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