KUALA LUMPUR (Nov 21): Mega First Corp Bhd’s (KL:MFCB) net profit rose 13.8% to RM116.64 million in the third quarter ended Sept 30, 2024 (3QFY2024) from RM102.53 million a year earlier, underpinned by stronger earnings from its renewable energy and resources segments.
The group also recognised an insurance income of RM7.23 million in the quarter under review. It booked a total of RM32.12 million for the nine-month period ended Sept 30 for assets damaged by a fire incident in 2023.
Notably, the group’s earnings were offset by a forex loss of RM18.4 million in 3QFY2024 due to a stronger ringgit against the greenback, and a higher share of losses in joint venture and associates of RM7.66 million, which nearly doubled from RM3.95 million a year ago.
Earnings per share was higher at 12.37 sen in 3QFY2024, compared with 10.87 sen in 3QFY2023.
Quarterly revenue grew 16.1% to RM372 million from RM320.38 million a year before, according to the diversified group's bourse filing.
It did not pay any dividend for the quarter under review.
Its renewable energy division recorded a pre-tax profit of RM130.55 million in 3QFY2024, up 6.3% year-on-year over RM122.8 million on higher revenue. The segment’s revenue increased by 12% to RM183.9 million from RM164.2 million previously on an increase in hydro energy and solar energy sales.
The resources division saw its pre-tax profit more than double to RM13.6 million from RM5.5 million on better revenue recognition, productivity improvement and a favourable sales mix. The segment’s revenue also improved 24.8% year-on-year to RM60.3 million from RM48.3 million due to low base effect, as sales volumes were impacted by plant maintenance by its major customers in 3QFY2023.
Its packaging division, however, reported a 25.6% drop in pre-tax profit to RM7.5 million over RM10.1 million a year ago dragged by margin pressures from intense price competition and a stronger ringgit. Its revenue was flat at RM98.2 million, despite a challenging operating environment amid industry overcapacity and weak consumer demand.
For the nine months of FY2024 (9MFY2024), its net profit swelled by 21.3% to RM317.46 million from RM261.69 million a year earlier as cumulative revenue expanded 2.4% to RM1.02 billion from RM993.39 million.
On its outlook, the group is confident of sustaining its growth momentum achieved in the normalised profit after tax and non-controlling interest (PATNCI) during 9MFY2024, which will be driven by the enhanced generation capacity following the commissioning of its fifth turbine at Don Sahong hydropower plant in July this year.
“The increase in effective ownership of DSPC (Don Sahong Power Company Ltd) from 80% to 95% in late 2023 is projected to result in double-digit year-on-year growth in PATNCI contribution to the group,” it said.
The optimism was also underpinned by the ringgit strength losing steam against the US dollar. The group recorded a forex loss of RM13.6 million in 9MFY2024.
Mega First also forecasted continued growth in its solar earnings, driven by the progressive installation of secured solar capacities, with an additional 65.9 MWp expected to commence commercial operations substantially in 2025. Currently, its total solar generation capacity stood at 28.8 MWp.
For its resources division, while the group expects overall firm demand for lime products in this region, the outlook for export sales in the last quarter is less clear. This was due to increased competition from overcapacity, and changing competitive factors stemming from significant fluctuations in transport costs and foreign exchange rate.
The packaging industry is projected to continue to face weak consumer sentiment and increased competition fuelled by global overcapacity.
Shares in Mega First gained seven sen to RM4.29, giving the group a market capitalisation of RM4.24 billion. Year to date, the stock has gained 16%.