Introduction
Mega First Corporation Berhad (MFCB: 3069) is a diversified
company operating in 3 main divisions – Power Generation, Resources and
Property Development and Investment. The Group operates mainly in Malaysia and
the People’s Republic of China.
The company has a market capitalization of RM 374mil.
Main Highlight - Power Generation Business
Mega First owns two power plants - 60% of Shaoxing Mega Heat & Power Co.,
Ltd. in China and 51% of Serudong Power Sdn Bhd. in Sabah. Note that this power business currently accounts for 76% of the group's revenue and operating profit.
Financial Highlights
For FY2012, Group's revenue stands at RM 632mil whereas net profit is RM 57mil. This translates into an EPS of 25.5 cents, thus valuing the company at 6.5 time PE.
With the power generation operations chalking up sizeable cash hoard over the years, MFCB is currently in a net cash position of approximately RM 60million (cash per share - 25 cents). On top of that, the company is capable of generating around RM 100million cash from operations every year for the past 5 years, thus giving it the ability to distribute good dividends.
Please see here for detailed financial highlights: 5-Year Financial Highlights
Key Risks
One key risk to MFCB's power operations is that both power plants are due for license renewal in 2017, thus rendering uncertainties over its earning visibility beyond the next 3 - 4 years.
Potential catalyst for the counter is therefore over possibility of extension of licenses and/or more favorable power tariff negotiations for these power plants.
Technical Highlights
Based on historical trends, MFCB qualifies as another long-term bullish counter. Current price level serves as a good foundation from which more upward movement can be expected. Share price has been consolidating since 2010 but has recently shown possible signs of moving out its consolidation price range of RM1.70 - RM1.80. Should the current momentum be sustained with trading volume, next targets shall be at RM2.00 and RM2.40, with longer term target at RM2.70.
Disclaimer - The information/ opinion above is intended for
reference / educational purposes only. The information does not constitute investment advice
or an offer to invest and is subject to
correction, completion and amendment without notice. Caveat emptor is advised.
