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Tuesday, November 24, 2015

Weaker ringgit lifts Mega First's 3Q

KUALA LUMPUR (Nov 23): Mega First Corp Bhd ( Valuation: 3.00, Fundamental: 2.70)'s net profit for the third quarter of its financial year ending Dec 31, 2015 (3QFY15) rose 18.02% year-on-year due to the stronger yuan and US dollar, more than making up for the weaker performances across all its business segments, said the diversified group in a Bursa Malaysia filing today.

Mega First's 3QFY15 net profit was RM26.54 million, or 18.02% higher than the previous year's RM22.49 million. Revenue, however, fell 11.3% to RM145.77 million in 3QFY14.

Mega First is principally engaged in power generation and has stakes in a 63MW coal-fired heat and power plant China, a 36MW diesel-fuelled power plant in Tawau, Sabah, and is developing the Don Sahong Hydropower Project in Laos. It is also involved in the quarrying of limestone and manufacturing and trading of lime based products and calcium silicate bricks as well as property development.

"The current quarter's results were bolstered by a strengthening renminbi and US dollar against the ringgit, which more than offset weaker operational performances across its three core operating divisions," said Mega First. Its three business segments are power generation, resources, and property development and investment.

Mega First said that the business activities of its power business in both China and Tawau, Sabah, recorded lower sales. With industrial output in China slowing down, Mega First said it resulted in lower sales volumes in steam and power there. As for its Tawau power plant, the group said the lower revenue was due to shorter operating hours and lower fuel prices.

Mega First's resources segment saw lower sales for lime products, calcium carbonate powder, and bricks, the company said.

Also in 3QFY15, Mega First's property segment's pre-tax profit fell by 83.52% y-o-y to RM831,000. "The weak performance was attributable to lower unit sales due to soft market conditions and lower recognition of revenue in the development segment. On the other hand, results of the investment segment remained fairly constant," Mega First elaborated.

For its 9MFY15, Mega First's net profit of RM36.27 million or 16.29 sen a share was 9.42% higher than last year's RM33.14 million or 14.88 sen a share. Revenue, however, fell by 18.44% y-o-y to RM283.72 million.

For the final quarter of FY15, Mega First said it expected to sustain its performance achieved in 9MFY15.

Construction of the Don Sahong Hydropower Project has recently commenced with the award of an engineering, procurement and construction contract to Sinohydro in October 2015, it said. According to the agreement, Mega First said it expected to recognise construction profits over four years beginning FY16.

For its resources division, Mega First said the commissioning of a new 400 tonne-a-day quicklime capacity in August could translate into long-term earnings growth for the division.

The group said its property division will suspend new property development launches until market condition improved, so it could conserve cash and lower operating overheads.

Mega First's counter gained one sen or 0.4% to close at RM2.50 today, barely making any gains from last year's close of RM2.407. Its market capitalisation stood at RM554.9 million.

(Note: The Edge Research's fundamental score reflects a company's profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)

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