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MAGNI: Market Headwinds Dampen Quarterly Performance, Cost Controls Aid Packaging Segment
| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
The company reported a challenging first quarter for fiscal year 2026, with core net profit declining 14.9% year-on-year to RM37.9 million, after accounting for a foreign exchange loss of RM2.3 million. Reported net profit also saw a significant drop of 20.3% to RM35.6 million. This downturn was primarily driven by a 13.7% year-on-year decrease in revenue, which stood at RM377.6 million.
Performance Highlights
The revenue contraction was largely attributed to lower sales orders across both the garment (-13.7% YoY) and packaging (-9.8% YoY) segments. Analysts pointed to tariff-related uncertainties and softer consumer sentiment amid rising inflation concerns as key contributors to the reduced demand. The garment segment’s operating profit margin contracted due to lower production efficiency.
However, the packaging segment provided a notable positive, with its profit before tax (PBT) jumping 77.7% year-on-year. This robust performance was mainly due to lower raw material costs, demonstrating effective cost efficiencies within that segment.
Outlook and Challenges
The near-term outlook remains cautious, with expectations of continued soft demand for sportswear apparel as rising inflationary pressures are likely to temper consumer spending. While the company could potentially benefit from the rerouting of Chinese textile exports to Vietnam, analysts remain wary of its competitiveness against other sportswear apparel suppliers, particularly given that Vietnamese exports to the US are facing potential tariffs of up to 20%.
Despite these immediate headwinds, the investment bank believes the company’s long-term growth will be supported by the increasing global awareness of health and wellness, which is expected to drive demand for athleisure products over time.
Investment Bank’s Recommendation
TA Securities has issued a recommendation for the company. The investment bank has set a target price of RM0.25, which implies a potential upside of 25.0% from the last traded price of RM0.20.
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