Mega First Corporation’s quarter one 2023 results were in line with Maybank Investment bank Bhd (MIBB)’s expectations as seasonally lower Don Sahong earnings were offset by sequentially higher contribution from resources and packaging.
“While management has adopted a more diversified stance towards new projects, the discipline and focus on returns remain intact,” said MIBB in a recent report.
“Excluding unrealised forex, fair-value adjustments and other one-off items, Mega First’s quarter one 2023 core net profit of RM95 million represents 25%/24% of our/consensus full-year forecasts,” said MIBB.
Reported earnings include RM26.3 million of provisions in relation to its long-standing tax dispute, which MIBB has excluded from their core earnings. No dividend was declared in the quarter, consistent with past practice.
During the quarter, renewable energy earnings before interest and tax (EBIT) declined quarter-on-quarter as Don Sahong’s availability fell seasonally to 81.9% as the dry season set in.
The plant also underwent maintenance in Feb-Mar 2023 having deferred maintenance in 2022. Meanwhile, resource EBIT rebounded quarter-on-quarter on the back of improved sales of lime products and higher plant efficiency. Packaging EBIT similarly grew quarter-on-quarter from improved sales.
Management will host its results call this afternoon, where it could potentially update on its options for the tax dispute.
“Our net profit forecasts and RM4.30 trading price are unchanged. Construction of Don Sahong’s 5th turbine is progressing as scheduled. Our forecasts have yet to reflect Mega First’s growing solar portfolio,” said MIBB.
