MGB: Positive Outlook and Buy Rating Affirmed Amidst Mixed Quarterly Performance

Investment bank TA SECURITIES has affirmed its “BUY” recommendation for the company, setting a target price of RM0.25, which represents a 25.0% upside from the last traded price of RM0.20. This positive outlook is maintained despite a mixed financial performance reported for the fourth quarter of fiscal year 2025 (4QFY25), underpinned by a resilient future outlook and a robust construction order book.

Performance Review

For 4QFY25, the company recorded a marginally higher headline net profit of RM14.1 million year-on-year (+0.1%). However, core profit, which excludes non-recurring items, saw a decline of 14.7%. Cumulative FY25 results were largely in line with TA SECURITIES’ estimates, reaching 99.6% of their full-year forecast, although slightly below consensus expectations at 93.9%. The quarter also saw the declaration of a first interim dividend of 0.126 sen per share, translating to a 2.6% dividend yield at the current share price.

Revenue for 4QFY25 experienced a 4.4% year-on-year decrease, primarily attributed to a 22.2% year-on-year drop in property development revenue to RM89.0 million. This was mainly due to the handover of completed units. The decline in property revenue was partially mitigated by a strong performance in the construction and trading segment, which recorded a 9.9% increase in revenue, reaching RM156.6 million.

Profit before tax (PBT) in 4QFY25 fell 23.2% year-on-year. This was driven by the lower revenue mentioned above and increased costs incurred at its overseas subsidiary, which has yet to achieve desired economies of scale. Nevertheless, this was partly offset by a stronger performance in the property development segment, where PBT improved by 52.6% year-on-year to RM28.4 million. This growth was primarily due to the delivery of vacant possession for project Idaman Melur and a decrease in administrative costs.

Future Outlook

The group’s future outlook is robust and resilient, underpinned by a significant construction orderbook of approximately RM1.15 billion and unbilled sales of RM0.41 billion from ongoing property development projects. The company remains committed to delivering affordable, high-quality homes while strategically diversifying its project mix and expanding into high-potential markets both domestically and overseas.

Furthermore, the company is leveraging its industrialized building system (IBS) Precast Concrete Technology and Building Information Modeling (BIM) to boost operational efficiency and productivity. Its venture in Saudi Arabia is progressing well, highlighted by an award of approximately RM444 million in November 2025 for a residential and commercial development in Medina, which solidifies its growing regional presence and capabilities. With a replenishment target of RM600 million for FY26, management expresses optimism about achieving satisfactory performance in the coming year.