This article first appeared in The Edge Malaysia Weekly on November 13, 2023 - November 19, 2023

Mega First Corp Bhd (MFCB), a member of The Edge Billion Ringgit Club (BRC) since 2017 and placed on its winners’ list every year since 2018, has secured a spot in its Hall of Fame with the highly-coveted BRC Company of the Year award for 2023. 

The developer of the 260mw Don Sahong Hydropower plant in southern Laos is controlled by low-profile businessman Goh Nan Kioh, its executive chairman and single largest shareholder with 34.8% equity interest.

It is perhaps prescient that Goh wrote in his chairman’s statement in the company’s 2022 Annual Report: “MFCB has once again been awarded twice at The Edge’s BRC Awards 2022 for the fifth year running for Highest Returns to Shareholders over three years and Highest Growth in Profit After Tax over three years, and will do our very best to carry on this winning streak.”

MFCB’s profit after tax (PAT) more than doubled from RM153.7 million in the financial year ended Dec 31, 2019 (FY2019) to RM321.3 million in FY2020, before climbing further to RM462.3 million in FY2021. Although the group’s earnings dropped to RM396.8 million in FY2022, it still achieved a remarkable risk-weighted three-year PAT compound annual growth rate (CAGR) of 24%.

Even though MFCB did not win the usual BRC corporate awards this year, its overall score for earnings growth, returns to shareholders and return on equity (ROE) over the last three years was high enough for it to clinch the most prestigious BRC award this year.

During the period between March 31, 2020, and March 31, 2023, MFCB saw its adjusted share price climb from RM2.081 to RM3.50, a decent gain of 68%. This boosted the group’s three-year CAGR returns to shareholders to 18.92%, according to the awards methodology.

While the stock has come off its all-time high, MFCB’s market capitalisation is still around RM3.2 billion — more than double the RM1.23 billion it had at end-2018 when it first joined the BRC winners’ list.

The group’s ROE improved from 18.56% in FY2020 to 21.4% in FY2021, before declining to 15.43% in FY2022, giving it an adjusted weighted ROE over three years of 17.85%.

The 70-year-old Goh, who has wide and varied business investments in many countries, is also the largest shareholder of D&O Green Technologies Bhd, a Melaka-based manufacturer of automotive light-emitting diodes (LEDs) which achieved back-to-back wins for highest total returns over three years among technology companies at The Edge BRC awards 2022 and 2023.

Many may not be aware that Goh was Carlsberg Group’s partner in Cambodia, where he built Cambrew Ltd — the country’s first and one of its largest brewers — which produces the iconic Angkor Beer. Carlsberg had in 2005 bought a 50% stake in Cambrew. The brewery giant took management control of Cambrew in 2018 after increasing its stake to 75%, before acquiring the remaining shares a year later.

Goh and his family are ranked 40th on Forbes’ “Malaysia’s 50 Richest” list, with a net worth of US$425 million (RM2 billion) in 2023.

Incorporated on April 25, 1966, the Petaling Jaya-headquartered MFCB has three main divisions, namely renewable energy (RE), resources and packaging, while also holding investments in other areas such as real estate and plantation.

Apart from operating the 260mw run-of-river Don Sahong Hydropower plant it built in Laos, its RE division also undertakes solar photovoltaic (PV) investment business activities.

Under the resources division, the group is engaged in the quarrying of limestone. It also manufactures and trades in lime products, calcium carbonate powder and bricks.

MFCB’s packaging division, meanwhile, manufactures a wide range of printed labels and stickers, paper bags and flexible packaging products for various industries.

Goh highlighted in his chairman’s statement that MFCB’s RE division — the largest contributor to the group’s income at 85.6% of profit before tax (PBT) — delivered yet another year of strong financial performance in 2022.

The Don Sahong Hydropower plant remained the strongest contributor to its RE division. It achieved a record-high PBT of RM419 million on an average energy availability factor (EAF) of 94.6% in FY2022.

“Assuming a stable ringgit versus US dollar exchange rate at around FY2022 levels of RM4.401 per dollar, management expects PBT in FY2023 to be marginally lower on an expected lower EAF and higher interest expense (due to interest rate hikes), offset by a 1% tariff adjustment (annually on Oct 1) and lower-than-expected credit loss,” Goh said. He added that the resources division “made healthy progress” in FY2022, whereby the total sales volume of MFCB’s lime products rose 14.7%, despite the various challenges faced by the industry, such as high fuel and logistics costs. “We are optimistic that we will continue to perform better going forward, as demand for lime products will remain robust as the world leaves the Covid-19 pandemic behind for good in FY2023 and whatever related logistical difficulties we faced are expected to taper off.”

On MFCB’s packaging division, Goh pointed out that its FY2022 performance had been “exceptional”, with revenue hitting a record level of RM399 million, despite the challenges and increasingly difficult business environment.

“We managed to exceed our targets and achieve this breakthrough thanks to our commitment to innovation and sustainability that has allowed us to differentiate ourselves in the market and attract new customers, while our focus on operational efficiency enabled us to improve productivity,” he elaborated.

With this year’s big win, Mega First clinches its 10th and most prestigious The Edge BRC award. It would not be its last if the group continues to successfully differentiate itself from the rest of the pack.

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