MAG: Robust Earnings Drive Optimism, Analysts Maintain Positive Stance

A recent investment bank research report indicates a strong financial performance, with core profit for the 15-month financial year 2025 (15MFY25) meeting expectations. Despite facing seasonal headwinds and currency fluctuations, strategic cost efficiencies and robust operational activities have underpinned the positive results and future outlook.

Performance Highlights

The company’s 15MFY25 core profit of RM71.1 million came in within expectations, representing 83% of the full-year forecast. This robust performance was driven by a significant 57.6% year-on-year (YoY) jump in core profit to RM71.7 million, correlating with a 58.9% YoY revenue growth. The impressive growth is primarily attributed to increased harvests and exports, demonstrating solid operational execution. While unfavorable exchange rates and a rise in finance costs did put pressure on margins, these impacts were successfully mitigated by a decline in tax expenses, which helped maintain overall profitability.

On a quarter-on-quarter (QoQ) basis, 5QFY25 revenue experienced an 8.9% dip to RM119.5 million. This decline was largely due to seasonal factors, as exports to key markets such as South Korea typically peak during the April-June period. The bottom line also saw a 70.4% QoQ drop to RM7.5 million, exacerbated by unfavorable forex movements that led to a sharp 12.7-percentage point contraction in the adjusted PBT margin.

Outlook and Strategic Initiatives

Looking ahead, the company anticipates its annual harvest to remain stable at 5,500 metric tons per year, with a healthy prawn survival rate of 80%. However, export revenue, which constitutes 60% of total revenue, could experience some pressure from a strengthening Ringgit. Analysts project that a 1% rise in the Ringgit against the USD could lead to a 3.6% decline in profit.

In terms of earnings projections, the bank has finetuned its FY26 earnings forecast slightly lower by 0.8%, following revisions to export prices and Ringgit assumptions (RM52.5/kg and 4.10/USD respectively). This adjustment reflects a proactive approach to market dynamics rather than a fundamental shift in the company’s prospects.

A significant development highlighted in the report is the progress regarding the repatriation of proceeds from China. Management is actively engaging with Chinese authorities and consulting its auditor to ensure transparency, with strong indications that Chinese authorities are nearing an agreement as capital control policies are gradually relaxing. This move is expected to enhance the company’s financial standing and transparency.

Analyst View and Recommendation

Given the strong operational performance, strategic initiatives, and the positive outlook, TA Securities maintains a BUY recommendation for the stock. The investment bank has set a target price of RM0.25, representing a substantial 25.0% upside from the last traded price of RM0.20, reinforcing confidence in the company’s continued growth potential.