by AUFA MARDHIAH / graphic TMR

AFTER a record earnings in 2022, main-market listed Mega First Corp Bhd is expected to see a slowdown in earnings growth this year in view of slight declines in the energy availability factor (EAF) for its renewable energy segment, reports a local research house.

However, PublicInvest Research has maintained its ‘outperform’ call on the counter with a 52-week target price of RM4.74. The stock was trading at RM3.43 at 4pm today, down 5 sen from yesterday’s close.

Despite setting aside a massive RM466 million for capital expenditure, the research house still expects to see gradual improvement in Mega First’s dividend payout.

Notwithstanding recent obstacles such as rising interest rates, growing operational costs, supply chain inventory overhang and excess, and weakening consumer mood, PublicInvest Research said it remains positive about Mega First’s profits outlook.

On the expansion plans for electrical and electronic (E&E) venture at Bloxwich (Malaysia) Sdn Bhd, the note said the Perak-based auto spare part supplier has seen an increasing orderbook for its mechanical parts from local and regional automakers.

“[Mega First] intends to invest RM4-5 million in capital expenditure to establish a new facility to boost its tooling machines capability. The spare part supplier reported RM18 million in revenue and a net profit of RM3-4 million in FY22. This year, revenues are likely to increase by double digits,” it said.

Its wholly-owned subsidiary Bloxwich offers supply panels, LED and other parts of foreign car companies.

For 2023, the group has committed RM464 million in capital: RM250 million for the construction of the fifth turbine at the Don Sahong Hydropower Plant in Laos, RM16 million for commercial and solar panel projects, RM150 million for the construction of two new factories for flexible and paper packaging products, and the remaining funds for the coconut and macadamia plantation in Cambodia.

Mega First posted net profit of RM396.80 million for the financial year ended Dec 31, 2022 (FY22), down 14% from the year before, on a turnover of RM1.34 billion, up 46% from FY21.

Mega First has three main divisions: renewable energy (RE), resources and packaging. The RE division builds and operates the Laos-based 260MW run-of-river hydropower plant as well as undertakes solar photovoltaic investment business activities.

The resources division is engaged in quarrying of limestone, manufacturing and trading of lime products, calcium carbonate powder and bricks, while the packaging division manufactures a wide range of printed labels and stickers, paper bags and flexible packaging products for multiple industries.