MGB BERHAD: Stepping Up In The Second Half
9DESCRIPTION
A construction company with presence in Saudi Arabia, specialised in building affordable housing and involved in property development.
12-month Target Price
| Current Price | RM0.50 |
| 12-month Target Price | RM0.78 |
| Expected Return | 55.7% |
| Previous Target Price | RM1.00 |
| Market | MAIN |
| Sector | Construction |
| Bursa Code | 7595 |
| Bloomberg Ticker | MLG MK |
| Shariah-compliant | Yes |
SHARE PRICE CHART
0.70
0.65
0.60
0.55
0.50
0.45
Mar-25 Apr-25 May-25 Jun-25 Jul-25 Aug-25
| 52 Week Range (RM) | 0.50-0.91 |
| 3-Month Average Vol (‘000) | 198.5 |
SHARE PRICE PERFORMANCE
| 1M | 3M | 6M | |
|---|---|---|---|
| Absolute Returns | -5.6 | -16.2 | -24.0 |
| Relative Returns | -6.5 | -19.3 | -27.4 |
KEY STOCK DATA
| Market Capitalisation (RMm) | 298.8 |
| No. of Shares (m) | 591.7 |
MAJOR SHAREHOLDERS
| % | |
|---|---|
| LBS Bina Group | 57.8 |
| Chek Lim Lit | 13.3 |
| Kenanga Growth Fund | 2.0 |
KEY FINANCIAL SUMMARY
| FY Dec (RM m) | 2023A | 2024A | 2025F | 2026F | 2027F | CAGR |
|---|---|---|---|---|---|---|
| Revenue | 971.8 | 1,032.0 | 1,015.6 | 1,198.2 | 1,262.2 | 9.1% |
| Gross Profit | 148.6 | 172.2 | 152.3 | 165.4 | 202.0 | 8.0% |
| Pre-tax Profit | 69.2 | 87.1 | 60.0 | 69.5 | 86.4 | 5.7% |
| Net Profit | 48.2 | 60.1 | 44.6 | 50.5 | 59.7 | 5.5% |
| Core Net Profit | 49.1 | 56.8 | 44.6 | 50.5 | 59.7 | 5.0% |
| Core EPS (Sen) | 8.3 | 9.6 | 7.5 | 8.5 | 10.1 | |
| P/E (x) | 6.1 | 4.9 | 6.6 | 5.9 | 5.0 | |
| DPS (Sen) | 1.6 | 3.0 | 2.3 | 2.6 | 3.0 | |
| Dividend Yield (%) | 3.3 | 6.1 | 4.5 | 5.1 | 6.1 |
Source: Company, PublicInvest Research estimate
Denny Oh
T 603 2268 3010
F 603 2268 3014
E oh.boonyeow@publicinvestbank.com.my
MGB reported a 21.6% YoY decline in headline net profit to RM11.9m for 2QFY25. Excluding non-recurring items, core net profit showed a steeper 24.2% YoY drop to RM10.8m, as more projects reached completion while new projects remained in early stages. The Group’s cumulative 6M25 results missed both our estimates and consensus figures, representing only 34.6% and 36.1% of respective full-year forecasts. We cut our FY25-27F earnings forecast by an average of 25.7% to account for higher mobilisation cost for new projects and slower-than-expected contract wins. Nevertheless, the Group’s outlook remains positive, supported by a robust construction orderbook of RM1.2bn and RM0.6bn in unbilled property sales. We retain our Outperform call, with a revised SOTP derived TP of RM0.78.
2QFY25 revenue declined by 19.2% YoY, primarily due to a 34.6% YoY drop in property development revenue to RM97.8m. This was mainly due to lower progress development for the ongoing development projects of Idaman Sari and Idaman Cahaya Phase 2. Construction and trading segment revenue remained stable at RM118.6m, as the Prestige project neared completion with minimal progress billings.
2QFY25 profit before tax (PBT) dropped 22.4% YoY, in line with lower revenue and increased cost incurred in oversea subsidiary. The construction segment’s loss before tax (LBT) widened to RM1.8m while property development segment PBT fell 34.6% YoY to RM19.8m, primarily due to lower progress billings and the completion of vacant possession deliveries for its Idaman Melur property project in Cybersouth, Selangor.
Outlook. MGB remains committed to delivering affordable, high-quality home while strategically diversifying its project mix. The Group is expanding into high potential markets both domestically and overseas, while strengthening its capabilities in securing more external contracts. The Group’s venture in Saudi Arabia is progressing well, having secured new orders for precast concrete products from Sany Alameriah for the Roshn Alarous development, a major residential project in Jeddah. These new orders, along with previous ones, solidify the MGB’s position in Saudi Arabia and demonstrate its ability to adapt their products to local requirements. Backed by the construction segment’s existing order book of approximately RM1.2bn and unbilled sales of RM0.60bn from ongoing property development projects, the group is optimistic about achieving satisfactory performance in 2025.
PUBLIC INVESTMENT BANK BERHAD
Table 1: Results Summary
| FYE Dec (RM m) | Comments | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| 2Q25 | 2Q24 | 1Q25 | YoY chg (%) | QoQ chg (%) | 6M25 | 6M24 | YoY chg (%) | ||
| Revenue | 216.4 | 268.0 | 227.7 | -19.2 | -4.9 | 444.1 | 485.9 | -8.6 | more projects reached completion while new projects remained in early stages |
| EBIT | 18.8 | 24.0 | 18.7 | -22.0 | 0.3 | 37.4 | 45.9 | -18.4 | |
| Interest expense | -1.7 | -2.3 | -1.7 | -24.9 | 1.9 | -3.4 | -3.9 | -12.5 | |
| Share of profits; JV and associate | 0.0 | 0.2 | 0.0 | -90.9 | -25.0 | 0.0 | 0.5 | -90.8 | |
| PBT | 17.1 | 22.0 | 17.0 | -22.4 | 0.1 | 34.1 | 42.6 | -19.9 | |
| Taxation | -5.1 | -6.2 | -5.0 | -18.0 | 1.7 | -10.1 | -11.7 | -13.5 | |
| Minority interests | -0.1 | -0.6 | -0.2 | -90.6 | -64.7 | -0.2 | -1.5 | -85.9 | |
| PATAMI | 11.9 | 15.2 | 12.0 | -21.6 | -0.8 | 23.9 | 29.4 | -18.6 | |
| Exceptional items | -1.1 | -0.9 | -0.9 | 18.3 | 20.4 | -2.0 | -0.8 | 148.6 | |
| Core PATAMI | 10.8 | 14.3 | 11.1 | -24.2 | -2.5 | 21.9 | 28.6 | -23.3 | |
| Margins (%) | |||||||||
| +/- ppts | +/- ppts | +/- ppts | |||||||
| EBIT | 8.7 | 9.0 | 8.2 | -0.3 | 0.5 | 8.4 | 9.5 | -1.0 | |
| PBT | 7.9 | 8.2 | 7.5 | -0.3 | 0.4 | 7.7 | 8.8 | -1.1 | |
| Core PATAMI | 5.5 | 5.3 | 4.9 | 0.2 | 0.6 | 5.2 | 5.9 | -0.7 | |
| Effective tax rate | 29.9 | 28.3 | 29.4 | 1.6 | 0.5 | 29.7 | 27.5 | 2.2 | |
| Segmental comparison | |||||||||
| Revenue (RM m) | |||||||||
| Construction | 118.6 | 118.5 | 113.5 | 0.1 | 4.5 | 232.1 | 248.8 | -6.7 | |
| Property development | 97.8 | 149.5 | 114.2 | -34.6 | -14.3 | 212.0 | 237.1 | -10.6 | |
| Total | 216.4 | 268.0 | 227.7 | -19.2 | -4.9 | 444.1 | 485.9 | -8.6 | |
| Headline PBT | |||||||||
| (RM m) | |||||||||
| Construction | -1.8 | -1.6 | -2.1 | 17.5 | -12.7 | -4.0 | 4.0 | -199.9 | |
| Property development | 19.8 | 24.4 | 20.0 | -18.8 | -0.9 | 39.8 | 39.9 | -0.1 | lower progress billings and the completion of vacant possession deliveries Idaman Melur |
| Others | -0.9 | -0.9 | -0.9 | 7.5 | 7.5 | -1.8 | -1.2 | 41.6 | |
| Total | 17.1 | 22.0 | 17.0 | -22.4 | 0.1 | 34.1 | 42.6 | -19.9 | |
Source: Company, PublicInvest Research
PUBLIC INVESTMENT BANK BERHAD
KEY FINANCIAL DATA
INCOME STATEMENT DATA
| FY Dec (RM m) | 2023A | 2024A | 2025F | 2026F | 2027F |
|---|---|---|---|---|---|
| Revenue | 971.8 | 1,032.0 | 1,015.6 | 1,198.2 | 1,262.2 |
| Gross Profit | 148.6 | 172.2 | 152.3 | 165.4 | 202.0 |
| Operating Expenses | -73.5 | -79.6 | -86.4 | -90.0 | -105.8 |
| Operating Profit | 75.1 | 92.7 | 65.9 | 75.4 | 96.2 |
| Finance Cost | -6.1 | -6.1 | -6.1 | -6.1 | -10.0 |
| Pre-tax Profit | 69.2 | 87.1 | 60.0 | 69.5 | 86.4 |
| Income Tax | -18.7 | -25.5 | -14.4 | -16.7 | -20.7 |
| Effective Tax Rate (%) | 27.1 | 29.2 | 24.0 | 24.0 | 24.0 |
| Minorities | 2.3 | 1.6 | 1.0 | 2.3 | 6.0 |
| Net Profit | 50.5 | 61.7 | 45.6 | 52.8 | 65.7 |
| Core PATAMI | 49.1 | 56.8 | 44.6 | 50.5 | 59.7 |
Growth
| 2023A | 2024A | 2025F | 2026F | 2027F | |
|---|---|---|---|---|---|
| Revenue (%) | 58.6 | 6.2 | -1.6 | 18.0 | 5.3 |
| Gross Profit (%) | 67.5 | 15.9 | -11.5 | 8.5 | 22.1 |
| Operating Profit (%) | >100.0 | 23.4 | -28.9 | 14.4 | 27.6 |
| Core Net Profit (%) | >100.0 | 15.5 | -21.4 | 13.3 | 18.1 |
Source: Company, PublicInvest Research estimates
BALANCE SHEET DATA
| FY Dec (RM m) | 2023A | 2024A | 2025F | 2026F | 2027F |
|---|---|---|---|---|---|
| Property, Plant & Equipment | 34.1 | 34.9 | 51.7 | 54.9 | 56.5 |
| Receivables | 70.2 | 125.9 | 160.4 | 179.0 | 182.6 |
| Cash at bank | 52.6 | 130.9 | 164.3 | 187.3 | 191.0 |
| Other assets | 966.2 | 868.7 | 900.4 | 908.2 | 941.1 |
| Total Assets | 1,123.0 | 1,160.5 | 1,276.8 | 1,329.4 | 1,371.2 |
| Loans and borrowings | 68.7 | 97.8 | 129.9 | 120.0 | 122.4 |
| Payables | 377.9 | 344.4 | 377.9 | 389.8 | 397.6 |
| Other liabilities | 121.9 | 121.6 | 141.0 | 156.1 | 145.9 |
| Total Liabilities | 568.5 | 563.7 | 648.8 | 665.9 | 665.9 |
| Shareholders’ Equity & Minority | 554.5 | 596.8 | 628.1 | 663.5 | 705.3 |
| Total Equity and Liabilities | 1,123.0 | 1,160.5 | 1,276.8 | 1,329.4 | 1,371.2 |
Source: Company, PublicInvest Research estimates
PER SHARE DATA & RATIOS
| FY Dec (RM m) | 2023A | 2024A | 2025F | 2026F | 2027F |
|---|---|---|---|---|---|
| Book Value Per Share (RM) | 0.93 | 1.01 | 1.06 | 1.12 | 1.19 |
| NTA Per Share (RM) | 0.51 | 0.58 | 0.63 | 0.69 | 0.76 |
| Core EPS (Sen) | 8.1 | 10.2 | 7.5 | 8.5 | 10.1 |
| DPS (Sen) | 1.6 | 3.0 | 2.3 | 2.6 | 3.0 |
| Payout Ratio (%) | 19.7 | 31.8 | 30.0 | 30.0 | 30.0 |
| ROA (%) | 4.4 | 4.9 | 3.5 | 3.8 | 4.4 |
| ROE (%) | 8.9 | 9.5 | 7.1 | 7.6 | 8.5 |
Source: Company, PublicInvest Research estimates
PUBLIC INVESTMENT BANK BERHAD
RATING CLASSIFICATION
DISCLAIMER
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PUBLIC INVESTMENT BANK BERHAD (20027-W)
26th Floor, Menara Public Bank 2
78, Jalan Raja Chulan,
50200 Kuala Lumpur
T 603 2268 3000
F 603 2268 3014
