PETALING JAYA: Mag Holdings Bhd
is expected to remain profitable in the second half of 2026 (2H26) despite persistent production cost pressures, with stronger prawn demand and higher selling prices providing some support, according to TA Research.
The research house expects MAG’s 1H26 profit to come in between RM13mil and RM17mil, representing 40% to 53% of its full-year forecast.
It said seasonally strong demand from South Korea in the second quarter ended June 30, 2026 (2Q26) – supported by buoyant stock markets and the resulting wealth effect – should lift average selling prices for prawn exports.
However, margins would likely remain under pressure as production costs continue to rise faster than revenue.
“The rise in production costs, at a pace faster than revenue, has dampened MAG’s gross profit margin, as reflected in the group’s 1Q26 results performance,” TA Research pointed out.
Production costs surged 64% year-on-year in 1Q26, driven mainly by higher feed and shrimp fry prices amid increased logistics expenses. Although MAG raised product prices, the increases were insufficient to fully offset the higher costs.
“Looking forward, the cost pressure is expected to persist into 2H26, crippling margin recovery,” TA Research said.
The brokerage expects MAG to remain profitable in 2H26, noting that foreign customers have accepted some degree of cost pass-through following requests from MAG and its regional competitors.
TA Research maintained its earnings forecasts for financial year ending Dec 31, 2026 (FY26) to FY28, and a fair value of 18 sen, based on an unchanged price-to-earnings multiple of eight times 2027 earnings.
The brokerage also kept a “hold” recommendation on MAG, with the target price implying a 10.2% potential share price upside from the 16 sen last traded price.
