MFCB: Performance Aligns with Expectations, Outperform Rating Maintained
| Investment Bank | PUBLIC INVESTMENT BANK |
|---|---|
| TP (Target Price) | RM5.39 (+70.5%) |
| Last Traded | RM3.16 |
| Recommendation |
Public Investment Bank has reiterated its “Outperform” rating on the company, maintaining an unchanged target price of RM5.39. This follows the group’s financial year 2025 (FY25) results, which saw core profit reaching RM437.2 million, aligning closely with both the investment bank’s and the street’s full-year expectations, achieving 97% and 104% respectively. A final dividend per share (DPS) of 5 sen was declared for the quarter, bringing the full-year DPS to 9.8 sen, an increase from 9 sen in FY24.
Performance Review
While the group’s overall core profit for FY25 experienced a 15% year-on-year contraction, primarily due to weaker contributions from its resources segment and the impact of a stronger Malaysian Ringgit, several segments showed resilience and improvement.
The renewable energy segment recorded slightly higher earnings of RM125 million, supported by cost efficiencies stemming from lower amortisation due to extended concessions, reduced turbine overhaul expenses, and a decrease in net royalties. Meanwhile, the packaging and labels segment saw a robust 16.4% year-on-year increase in sales, driven by higher plant utilisation. The resources segment also posted an 8.1% growth in sales volume, attributed to a significant 18% increase in lime product sales, which helped mitigate the adverse effects of weaker export currency values and a decline in non-lime product sales.
Despite these positive developments, the Don Sahong Hydropower Plant’s Energy Availability Factor (EAF) saw a slight dip to 83.1% in FY25 from 86.8% in FY24, influenced by the new capacity from its fifth turbine. The resources segment’s earnings declined 22.7%, impacted by margin compression from elevated freight charges and the stronger Ringgit.
Future Outlook and Challenges
The outlook for the company’s joint venture (JV) owned oleochemical business remains challenging. This segment continues to face headwinds from low utilisation rates of 62%, unfavourable currency movements, and overcapacity within the region.
However, the sustained “Outperform” rating and unchanged target price reflect Public Investment Bank’s confidence in the group’s underlying business segments and future earnings trajectory. The financial summary forecasts continued growth in core net profit, projecting RM465.2 million for FY26, RM500.2 million for FY27, and RM540.0 million for FY28.
