PETALING JAYA: Mega First Corp Bhd
(MFCB) could enter a cleaner earnings trajectory from financial year 2027 (FY27) following the planned divestment of its 50% stake in oleochemical joint venture Edanor Technology Sdn Bhd.
AmInvestment Bank (AmInvest) Research noted that the disposal of the Edenor plant at Teluk Panglima Garang would remove a persistent drag on profitability.
Without Edenor, MFCB’s FY27 net profit is projected to rise by RM60mil to RM70mil, translating into a 15%-20% uplift.
However, the brokerage warned that MFCB’s FY26 results will likely absorb a one-off impairment of RM101mil, equivalent to Edenor’s book value, depending on the final sale price.
In the meantime, the group’s core strength remains its renewable energy division, particularly its Don Sahong Hydropower Plant (DSHP) in Laos.
AmInvest Research stated that DSHP’s performance is seasonally stronger in the second quarter (2Q) due to monsoon-driven water levels, with its equivalent availability factor expected to exceed 80% versus 74.4% in the 1Q.
The research house also stated that MFCB could benefit from a weaker ringgit-US dollar exchange rate, as DSHP’s revenues are denominated in the greenback.
A 10 sen rise in the exchange rate is estimated to lift MFCB’s earnings before interest and tax (Ebit) by 2%.
MFCB’s resources and packaging divisions businesses remain subdued.
Lime demand faces competitive pressure from China, though gradual price hikes in line with petcoke costs may provide some relief.
Packaging demand remains soft, reflecting global consumer sentiment.
Nevertheless, these segments contribute a stable Ebit of RM61mil in FY26 (ending Dec 31, 2026).
AmInvest Research maintained a “buy” call on MFCB with a target price of RM3.84 per share, pegged to FY27 price-to-earnings (PE) of 10 times.
At current levels, MFCB trades at a compelling FY27 PE of 7.5 times, underscoring undemanding valuations, it noted.
