Mega First expected to deliver steady Q2 earnings


KUALA LUMPUR: PublicInvest Research expects Mega First Corp Bhd to announce steady Q2 results on the back of higher construction revenue from the Don Sahong Hydropower project in Laos.

The research house said noticeable progress was seen in the construction of Mega First's 80%-pwned Don Sahong Hydropower project, brining the cumulative physical completion to 65% as of 1HFY18.

It said the government's transmission line from the Electricite du Laos Ban Hat substation to Don Sahong’s Ban Hut substation is currently under construction.

"We are confident that the company will be able to achieve the 80% target by year-end," it said.

Meanwhile, the 60%-owned Shaoxing power plant and 51%-owned Serudong power plant in Tawau have both ceased operations following the expiry of their respective concessions. 

The Shaoxing plant was closed down by the joint venture partner a few months after taking over the operations from Mega First, incuring a one-off retrenchment fee.

Mega First said the second partial and final award from Sabah Electricity Sdn Bhd would likely be used to offset the impairment charges amounting to RM14mil and provision for retrenchment.

In another development, PublicInvest noted that Mega First is planning to partly pass on the additional cost from the price increases in petcoke while the strenghtening US dollar will also help cushion the impact. 

The research house retained its outperform call on Mega First with an unchanged target price of RM4.74.
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