KUALA LUMPUR (March 19): Shares in Magni-Tech Industries Bhd surged on Tuesday to their highest in three years, on the back of a spike in trading volume, as investors cheered the apparel company’s strong earnings.

Magni-Tech rose as much as 8.9% to RM2.21, its highest since March 24, 2021. At 9.30am, the stock was trading at RM2.18, 7.4% higher than the previous day’s close, after 772,200 shares changed hands on Bursa Malaysia. In contrast, the country’s benchmark index FBM KLCI was 0.4% lower.

“We believe that consumers' focus on health and active lifestyles will remain the key growth driver of global consumption of sportswear,” Public Investment Bank, the sole research house covering Magni-Tech, said and reiterated its ‘outperform’ call on the stock.

The house also raised its target price by over 8% to RM2.50, a potential upside of nearly 15% from the current share price.  

On Monday, Magni-Tech reported that its net profit nearly doubled to RM39.38 million for the three-month ended Jan 31, 2024 (3QFY2024) from a year ago, thanks to foreign exchange gains that bolstered higher garment sales. Revenue for the quarter was up 39% year-on-year to RM392.19 million.

The company also declared a higher third single-tier interim dividend of 3.5 sen, versus the two sen declared during the same quarter last year.

The latest results were better than expected, Public Investment Bank noted, raising its earnings estimates for Magni-Tech by 8%-11% for FY2024-FY2026 to account for strong sales.

Earnings may weaken in 4QFY2024, however, as the third quarter is a seasonally stronger period for Magni-Tech, the research house said. Still, the upcoming Summer Olympics in Paris could boost “athleisure sales”, and a major client is also looking to launch new products, it flagged.

Further, Magni-Tech’s current valuation is 'attractive', trading below its five-year average forward earnings of eight times, the house added.

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Magni-Tech 3QFY2024 profit jumps 92%, raises dividend to 3.5 sen