PETALING JAYA: Mag Holdings Bhd
is expected to see sustained growth in its core aquaculture and food trading operations, bolstered by continued improvements in farming efficiency and productivity, Mercury Research says.
In a note, the research house said MAG’s adoption of advanced smart-farming technologies should enhance operational consistency and long-term sustainability.
It added that the company’s ongoing marketing efforts and distributor expansion is primed to broaden its market reach.
“Although the external environment remains uncertain, MAG’s efficiency initiatives and integrated operating model position it to deliver a steady financial performance heading into next year.”
Mercury Research said MAG changed its financial year-end from June 30 to Dec 31. The next full financial period will be an 18-month period from July 1, 2024 to Dec 31, 2025 (FY25), so its results for the fifteen months ending Dec 31, are non-comparable against earlier estimates for the current calender year.
“While the additional quarter distorts the reporting cycle, a normalised three-month run-rate basis shows earnings tracking at 25% of our 2026 forecasts, broadly within expectations,” the research house said.
The research house has revised upwards its FY25 topline and earnings for MAG both by 45% to reflect the extended 18-month financial period.
It also noted that while MAG’s revenue for the fifth quarter of its current financial year slipped 8.9% from the previous quarter as a result of softer trading activity, this drop is not considered unusual within the context of the company’s historical quarterly patterns.
Net profit margin also dipped from 13.1% to 8.3% as a result of an effective tax rate increase of 3.7 percentage points quarter-on-quarter.
Nevertheless, Mercury Research has maintained its “buy” call on MAG.
Its target price of 22 sen also remains unchanged, based on a 9.5 times price-earnings (PE) multiple applied to FY27 earnings-per-share (EPS) of 2.3 sen.
“This implies a 15% discount to peers’ trailing PE average of 11.1 times,” the research house said, adding that MAG’s valuations remain undemanding.
MAG is an aquaculture-based food producer with around 20% industry revenue share, backed by a fully integrated value chain that encompasses hatchery, farming, processing and distribution.
As a leading prawn aquaculture player in Malaysia, the company owns 384 cultivation ponds and two processing plants.
Mercury Research cites its market-leading position as a key reason for its positive outlook on MAG.
Other factors include its strong export footprint across high-value markets across Asia with robust long-term demand for premium prawn products, and efficiency-led growth backed by smart-farming adoption and productivity improvements.
In March, MAG announced that it hadpurchased eight plots of farmland in Sabah for a total of RM39.2mil as the group seeks to expand its prawn aquaculture business.
The properties, located in Tawau, encompass over 40.47ha of land under a 98-year lease. The purchased assets include buildings, machinery, equipment, and motor vehicles integral to farm operations.
The acquisitions were financed through a combination of bank borrowings and internally generated funds.
The research house’s upbeat view is also supported by an attractive risk-reward profile for a small-cap aquaculture specialist, as well as favourable industry fundamentals such as tightening biosecurity standards, increasing protein consumption and Malaysia’s strategic position as a certified supplier to key regional markets.
