KUALA LUMPUR (Sept 4): Mega First Corporation Bhd (KL:MFCB) is gearing up for a robust second half ending Dec 31, 2024 (2HFY2024), bolstered by increased energy availability and a turnaround of its oleochemical business.
In a note on Wednesday, PublicInvest Research noted that the company expects energy availability at its Don Sahong hydropower plant to rise to 98%-99% during the wet season, alongside a normalised margin for the resources segment.
“The Don Sahong hydropower plant will undergo its first overhaul for all the turbines starting from January 2025, which could take up to three months compared to the normal maintenance period of 10 to 12 days,” the research house said.
A key positive development is the anticipated turnaround of Edenor Technology, MFCB’s 50%-owned oleochemical business, which is expected to benefit from higher capacity utilisation in 2HFY2024.
The research house maintained its ‘outperform' call on MFCB with a target price of RM5.36, on the back of upcoming agreements and expected earnings growth as key rerating catalysts.
Besides, the company is in the final stages of securing a new power purchase agreement and concession agreement that will cover all five turbines at the Don Sahong plant. These agreements are expected to be finalised by year end.
Resources segment
“The resources segment has shown significant improvement, with limestone operations running at 70% capacity utilisation. Notably, 1HFY2024 saw the segment’s pre-tax profit surpassing the entire FY2023, driven by increased sales volumes and lower pet coke costs,” PublicInvest Research said.
MFCB is also reportedly close to securing a piece of commercial land in Setia Alam for the construction of a hospital.
The facility, which will begin with 130 beds and eventually expand to 230 beds, is expected to take up to 4.5 years to commence operations.
At time of writing on Wednesday, MFCB’s share price had risen six sen or 1.34% to RM4.43, valuing the company at RM4.38 billion.