PETALING JAYA: Mag Holdings Bhd
’s near-term earnings outlook has turned slightly more cautious as start-up losses from its new Shanghai food-processing plant are expected to weigh on profits over the next two financial years, says TA Research.
However, it remained positive on the group’s medium-term prospects given stronger export margins and a leaner balance sheet.
TA Research maintained its “buy” call on MAG with an unchanged target price of 21 sen, after revising financial year 2026 (FY26) and FY27 earnings lower, before raising FY28 estimates by 34% on expectations that the China venture will begin contributing meaningfully once utilisation improves.
The research house said the group’s RM100mil food-processing plant in Shanghai, targeted for completion by the second quarter of 2026, marks MAG’s second major attempt at building a stronger downstream presence in China.
On its core business, MAG’s latest quarterly performance remained supported by stronger gross margins despite currency movements.
Core profit for the quarter ended December 2025 rose 20.5% year-on-year (y-o-y) to RM20.1mil, helped by higher selling prices and lower feed costs amid ringgit appreciation.
Gross profit expanded 71.9% y-o-y, outpacing revenue growth of 49.5%.
However, management signalled that price increases may have reached their limit.
“The average selling price (ASP) reached a point that would reduce MAG’s competitiveness, thus pausing the ASP hikes when the ringgit appreciated further to RM3.90 to the dollar level,” the report said.
TA Research also pointed out that customers had indicated they may switch to Vietnamese suppliers if prices rise further.
About 60% of MAG’s revenue is denominated in US dollars, largely from exports to South Korea, Taiwan, Australia and China, while about 60% of cost of goods sold – mainly feedmill expenses – is also dollar-linked.
Meanwhile, MAG’s balance sheet has become cleaner after fully impairing a RM244mil loan to a former China subsidiary, reducing shareholders’ funds by 26.3% to RM653.8mil.
Despite the impairment, management said annual dividend payments will continue, supported by RM53.9mil cash holdings.
TA Research said while external risks such as shipping disruptions from Middle East tensions could affect exports later this year, MAG remains fundamentally supported by resilient seafood demand and improving downstream integration.
