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Mega First Corporation Berhad Q2 2025: Navigating Headwinds with a Resilient Core and a Dividend Surprise
Mega First Corporation Berhad (MFCB), a diversified group with core businesses in renewable energy, resources, and packaging, has just released its financial results for the second quarter ended June 30, 2025. The report paints a picture of a company navigating a challenging market landscape. While overall revenue saw a modest increase, profits faced significant pressure. However, the resilience of its core Renewable Energy division and a pleasant dividend announcement for shareholders are the key stories here. Let’s dive deep into the numbers.
Despite a 2.4% year-on-year revenue growth in Q2 2025, the company’s Profit Before Tax (PBT) saw a decline of 22.8%. Let’s break down the core figures.
Core Data Highlights: A Tale of Two Halves
A closer look at the financial data reveals a mixed performance across the board. While the top line grew, the bottom line was impacted by various factors including weaker divisional performance and external economic pressures.
Q2 2025 Performance
Revenue: RM 339.9 million
Profit Before Tax (PBT): RM 91.3 million
Net Profit (PATNCI): RM 84.8 million
Earnings Per Share (EPS): 8.99 sen
Q2 2024 Performance
Revenue: RM 332.0 million
Profit Before Tax (PBT): RM 118.3 million
Net Profit (PATNCI): RM 105.4 million
Earnings Per Share (EPS): 11.18 sen
The reported profit drop was primarily driven by weaker contributions from the Resources and Packaging divisions, increased foreign exchange losses, and a higher share of loss from its associate, Edenor, which faced operational disruptions. It’s also important to note that the corresponding quarter last year included a one-off insurance income of RM2.5 million, which makes the year-on-year comparison appear steeper.
A Deep Dive into Business Segments
The strength of MFCB’s diversified portfolio is evident when we analyze the performance of its individual business units.
| Business Division | Q2 2025 PBT (RM million) | Q2 2024 PBT (RM million) | Change |
|---|---|---|---|
| Renewable Energy | 112.8 | 110.2 | +2.4% |
| Resources | 8.3 | 12.6 | -34.3% |
| Packaging | 3.5 | 9.1 | -61.3% |
Renewable Energy: The Shining Star
The Renewable Energy division continues to be the group’s bedrock, posting a resilient 2.4% increase in pre-tax profit. This was achieved despite a 5.4% reduction in hydro tariffs under a new agreement and currency translation losses. The key driver was a 10.9% rise in energy generation, thanks to the contribution from its fifth turbine. Furthermore, profitability was bolstered by reductions in net royalty, interest expenses, and amortisation charges, showcasing strong operational management.
Resources & Packaging: Facing Market Pressures
The manufacturing segments faced significant headwinds. The Resources division saw its pre-tax profit fall by 34.3% due to soft export demand for lime products and heightened competition, which was compounded by higher freight and production costs. Similarly, the Packaging division experienced a sharp 61.3% drop in pre-tax profit. While it successfully defended its market share with stable revenue, its margins were severely squeezed by industry overcapacity, intense price competition, and a weaker US Dollar impacting export proceeds.
Navigating the Tides: Risks and Future Outlook
Management acknowledges that the global economic backdrop remains unsettled, with policy uncertainty and trade frictions weighing on investment and consumer spending. However, the outlook for the second half of the year holds several promising signs.
- Renewable Energy: This division’s earnings are expected to remain resilient. With the wet season approaching and all five hydro turbines now fully operational after maintenance, energy generation is set to increase. The solar segment is also on a growth trajectory, with plans to nearly triple its installed capacity by the end of 2025.
- Resources & Packaging: While the environment for these divisions remains challenging, management believes the worst may be over. The competitive landscape in Resources is expected to stabilize, and for Packaging, there are encouraging signs that the market has bottomed out, with a gradual recovery in orders anticipated in the second half.
- A Key Turnaround Story: A significant drag on profits in the first half was the operational disruption at its associate, Edenor. With gas supply fully restored in early July, a “marked turnaround” in its financial contribution is expected, which could provide a substantial boost to group earnings.
Dividend Declaration: A Sign of Confidence
In a strong signal of confidence in its future cash flow and commitment to shareholders, the Board has declared an interim single-tier dividend of 4.75 sen per ordinary share for the financial year ending 31 December 2025. This is an increase from the 4.50 sen dividend declared in the corresponding period last year.
Summary and Investment Recommendations
Mega First Corporation Berhad’s second-quarter performance was a mixed bag, showcasing the challenges in its manufacturing arms against the formidable strength of its Renewable Energy division. The decline in reported profit, while significant, was influenced by specific divisional headwinds and a non-recurring gain in the previous year. The outlook for the second half of 2025 appears brighter, driven by the anticipated sequential improvement in the hydro division, a potential market recovery for Packaging, and a significant turnaround expected from its associate, Edenor.
The increased interim dividend is a noteworthy positive, reflecting the board’s confidence in the Group’s operational stability and long-term prospects. Investors will be watching closely to see if the anticipated recoveries materialize in the coming quarters.
- Key Risks to Monitor:
- Continued margin pressure in the Resources and Packaging divisions due to competition and economic slowdown.
- Volatility in foreign currency exchange rates, particularly the US Dollar, which impacts revenue from the hydro division and export-oriented businesses.
- Execution risk related to the expansion of the solar energy portfolio.
- The pace and strength of the operational turnaround at the Edenor associate plant.
From a professional standpoint, this report highlights the strength of MFCB’s diversified model. While the manufacturing arms (Resources and Packaging) are currently facing cyclical headwinds, the stable and resilient cash flow from the Renewable Energy division provides a strong foundation. The proactive dividend declaration, despite the drop in reported profits, signals management’s confidence in future cash flows and a commitment to shareholder returns.
Join the Conversation
What are your thoughts on MFCB’s strategy? Do you believe the anticipated recovery in the second half will materialize?
Share your insights in the comments below! We’d love to hear from the community.
For more analysis on companies in the renewable energy and industrial sectors, check out our other articles.
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