PublicInvest Research

Author: PublicInvest   |   Latest post: Thu, 5 Aug 2021, 10:17 AM


Magni-tech Industries Berhad - In-line With Expectations

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Magni-Tech’s (Magni) 1QFY21 revenue declined by 10.8% YoY to RM292m, while its net profit fell by 13.1% YoY to RM26.8m, mainly dragged by the lower sales orders from both garment and packaging segment. Results were in-line with expectations, accounting for 22% of our full year estimates. We leave our earnings estimates unchanged and remain positive on Magni’s future prospects as we understand that sales orders from its single major customer have been gradually recovering to pre-lockdown levels. Our Outperform call on Magni is retained with an unchanged SOP-based TP of RM2.85. On a side note, Magni declared a single tier interim dividend of 2 sen.

  • 1QFY21 Revenue (-10.8% YoY, +10.9% QoQ). Garment segment revenue fell by 11.4% YoY as sportswear demand were impacted by the Covid-19 pandemic. Meanwhile, packaging segment revenue slipped by 2.9% YoY mainly attributable to lower sales volume recorded during the Movement Control Order (MCO) period.
  • 1QFY21 Pretax Profit (-12.4% YoY, -4.2% QoQ). In tandem with the lower sales orders received, the garment segment PBT declined by 14.1% YoY. In addition, the garment segment was also affected by the lower dividend income derived as the investee has yet to distribute dividends. Note that during 1QFY20, Magni’s garment segment received RM2.4m dividend income. On a brighter note however, the packaging segment PBT jumped by 32% likely due to the lower polyethylene resin cost.
  • Future outlook. We believe the global athletic sportswear industry will remain robust as sports events are restarting progressively and the easing in global lockdown measures. Although capacity expansion plans is largely on hold for now, Magni will continue to focus on operational enhancement by investing in automation to boost productivity. Given Magni’s strong net cash position of RM320m with zero borrowings, we do not rule out the possibility of M&A exercises in the future to diversity its product offerings.

Source: PublicInvest Research - 9 Sept 2020

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