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Mega First Corporation - Waiting On Major

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Date: 25/09/2017

Source : PUBLIC BANK PARTNER APP

Stock : MFCB Price Target : 3.48 | Price Call : BUY
Last Price : 3.65 | Upside/Downside : -0.17 (4.66%) MQ Trader >
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We came away from a recent meeting with Mega First (MFCB)s management with the understanding that its power
and resources segments will be faced with several key decisions to be made and possible hiccups in the coming
months. The power segment will see the expiry of power purchase agreements (PPA) for its China and Tawau
power plants while the resources segment will likely hit a speed bump in 3Q. Despite those uncertainties, we
maintain our Outperform, RM3.48 TP call as we believe the steady progress in its Don Sahong Hydropower
project will continue to be the key growth driver for over the long term.

Existing power concessions expiring soon. MFCBs two power plant concessions are an 83MW coal-fired
heat power plant in Shaoxing City, China and a 36MW diesel-fuelled power plant in Tawau, Sabah. The 60%-
owned China power concession, which currently contributes 29% of the Groups revenue, is expiring next 290 456 488 611
month. Though MFCB has an option to extend this power concession by another 5 years until 2022,
management has yet to decide whether to proceed with the extension however. The major decision will Active Gainers Losers
Top 10 A ctive Counters
likely be known by the end of this month. Assuming there is no extension, there could be a minimal provision
Name Last Change
of RM10m for the write-off of assets that will be recognized this year. Meanwhile, its 51-%-owned Tawau
HIBISC S 0.63 +0.015
power plant concession will expire on 1 Dec. Management is currently in negotiations with the Energy
BO R NO IL-W D 0.05 0.00
Commission and is optimistic over the progress. We understand that the proposed power purchase SC O MI 0.185 -0.005
agreement extension will be for another 5-year period with a slight upward adjustment in the tariff rate. TR IVE 0.165 +0.005
HUAAN 0.205 -0.025

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 HUAAN 0.205 -0.025
Don Sahong Hydropower project is on track. The construction of the mega hydropower project in Laos has
C IMB 6.31 -0.04
reached 30.9%, significant progress compared to only 7.4% in June last year. The first part of the turbine
NETX 0.055 0.00
casing is expected to be delivered by next month. Though the rainy season has slowed down its on-site MMAG 0.26 +0.04
activities, its off-site activities such as manufacturing of the main turbine and generator components are in TR IVE-W B 0.04 -0.005
full swing. Management maintains its target of 45%-50% by the end of this year. It expects to dish out the HUBLINE 0.085 +0.005

transmission line contract by the end of the month. The last chunk of fund raising exercise, which is the
USD150m borrowing, is also expected to be finalized by end of this month. What has come as a surprise,
however, is that once the plant starts running its trial production in 2HFY19, we have been told there could TOP ARTICLES
be a one-off bumper gain to be recognized, which is not reflected in our current FY19 earnings forecast.
1. You might had missed Liihen,
Minor hiccup in resources segment. We understand that one of the key customers for its limestone but don't miss out what
Morgan Stanley is buying
business has experienced a temporary shutdown, affecting sales in 3Q. Nevertheless, the key customer has
now!!! Bones c ythe Stoc k Watc h
re started its production lines, to which we expect to see a pick-up in sales in the final quarter. The current
utilization rate of its limestone production (about 40,000mt/ mth) stands at 70%, generating about 24k-34k 2. Investing during retirement
kcchongnz kc c hongnz blog
mt/ mth.
3. (Spencer88ANNJOO
Source: PublicInvest Research - 25 Sept 2017 LIONIND MASTEEL
SSTEEL
Spenc er8 8 blog

4.
GRAPHITE ELECTRODE
ANNJOO LIONIND SSTEEL
MASTEEL

5. Lionind Top 4 Rebar

Manufacturer in Malaysia
(Part 1) D avidts lim s haring

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 Related Stocks

Chart Stock Name Last Change Volume

MFCB 3.65 -0.06 (1.62%) 375,600

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