Magni-tech (Magni) reported a headline net profit growth of 4.4% YoY to RM127.2m for FY21, thanks to the higher sales in both garment and packaging segment. Stripping out the unrealised one-off disposal gain and forex loss, Magni’s core net profit stood at RM121.5m. The results were in line with our estimates, accounting for 101% of our forecast. Moving forward, we remain upbeat on Magni’s long term outlook, driven by the growing awareness on healthcare favouring a more active lifestyle as well as the revival in major sporting events. We maintain our Outperform call on Magni with a higher SOP TP of RM3.00 (from RM2.88) as we roll forward our valuation base year to CY22F. On the other hand, Magni declared a 4th Interim dividend of 2.8 sen, bringing the total dividend declared for FY21 to 11.1 sen (FY20: 9.43 sen).
- 4QFY21 Revenue (+13% YoY, -19.1% QoQ). Garment segment revenue increased by 11.5% YoY to RM270.9m, likely attributable to the growth in digital sales from Magni’s largest customer. Meanwhile, packaging segment revenue grew by 30.6% to RM26.6m, thanks to the higher orders of packaging products received.
- 4QFY21 Pretax Profit grew by +13.3% YoY to RM41.6m. Garment’s PBT increased by 12.4% YoY to RM39.5m, due to higher revenue, improved operational efficiency and higher dividend income from unquoted share investments. As for the packaging segment, PBT jumped by 52.5%, on the back of higher revenue and better margins from flexible packaging. Magni’s PBT margin maintained at 14% despite the higher raw material costs as the group managed to pass on the increase in costs to its customers.
- Outlook. We continue to expect strong export orders from Magni’s customer, especially to the US and EU region, driven by the reopening of the economy, strong digital presence as well as the upcoming Tokyo Olympics which could potentially build brand awareness. In addition, given the increase in consumers’ awareness about health and fitness, we think that it will continue to boost sportswear demand globally. We understand that Magni is planning to allocate c.RM30m in 2022 to set up a JV plant in Indonesia for capacity expansion, in order to diversify its customer base whilst fulfilling more orders from its single largest customer.
Source: PublicInvest Research - 24 Jun 2021