Financial Highlights

The following sets out a summary of the combined financial information for the FYE Under Review:

• The revenue consistently grew from RM 135 million in FYE 2021 to RM 166 million in FYE 2024, indicating an expansion in market share.

• The gross profit margin decreased from 35.38% in FYE 2021 to 33.23% in FYE 2022, primarily due to a drop in the GP margin of loan securement product sales in Europe, but it subsequently rose to 45.32% in FYE 2024.

• The PAT margin increased from 3.37% in FYE 2021 to 12.96% in FYE 2024.

• The gearing ratio is 0.72, which is above the healthy range of 0.25 - 0.5, putting the company at risk of liquidity issues. 

Major customers and suppliers

Major Customers

The company Group’s top five major customers and their contributions to the company revenue for FYE 2024 are as follows:

The company is not dependent on any single customer as there were no customers that contributed more than 10.00% of the company total revenue. 

Major Suppliers

The company Group’s top five major suppliers and purchases for FYE 2024 are as follows:

The company is not dependent on the other major suppliers as each of them accounted for less than 10.00% of the company total purchases.

Industry Overview

A security seal is a device designed to secure and protect the integrity of goods within an enclosure until it accessed. Most security seals are designed for single-use only, except for electronic seals which may be reusable. It often used to seal packages, tote boxes, doors of containers, trailers and trucks, and other access points during transportation and storage. They may act as a physical barrier against any unauthorised entry. Security seals are an integral part of the chain of custody in the supply chain. They often have features that allow for traceability such as unique serial numbers, barcodes or quick response (QR) codes to enable tracking of individual products or shipments. Some security seals may incorporate electronic tracking and monitoring capabilities, typically through radiofrequency identification (RFID) or global positioning system (GPS) technologies.

Demand for security seals may affected by various factors. Higher economic activities would stimulate the production and consumption of goods, which increases the production, storage and movement of goods, thus driving the need for goods to be secured between production and usage or access. Importers and exporters rely on security seals to safeguard goods against tampering, theft and unauthorised access during cross-border trades. Container throughput measures the volume of containers handled at ports, and containers require security seals to ensure the security and integrity of goods. As such, growth in economic and trade activities including container throughput through ports will increase the demand for security seals. 

In 2023, the merchandise export value in Europe, Asia and the USA accounted for 36.5%, 35.8% and 8.5% of the global merchandise exports respectively, while the merchandise import value in Europe, Asia and the USA accounted for 36.5%, 32.7% and 13.1% of the 

global merchandise imports respectively. The global trade was declined in 2023 which primarily influenced by diminished demand in developed nations, underperformance in East Asia and Latin American economies, and a decrease in commodity prices, resulting in a contraction of trade of goods. Nevertheless, the global trade of goods indicated signs of recovery in the fourth quarter of 2023 with a quarter-on-quarter growth of 2.8% in global merchandise exports and imports.

The key drivers in this industry:

• Increasing regulatory requirements from governments and international organizations
• Growing awareness of environmental sustainability

• Expansion in global trade, economic growth, and rising e-commerce activities

Source: Vital Factor analysis

Future plans and strategies for MEGA FORTRIS BERHAD

A summary of the company business strategies and plans is as follows:

1. Production facility expansion in Malaysia and UK

2. New business in providing total solution in supplying and handling of playing cards in sealed security boxes in Malaysia and Macao

MQ Trader View

Opportunities

1. The company has a wide range of security products that enable them to address a large number of user industries to sustain and grow the business

2. The company has wide geographic coverage (including Asia Pacific, Europe, the Americas and the Middle East) to provide them with a large addressable market

Risk 

1. The company is exposed to risk of increase in sea freight rates

2. The company may not be able to realise the anticipated benefits of its future plans

3. The company is subject to regulations relating to occupational safety and health administration and environment

Click here to continue the IPO - Mega Fortris Berhad (Part 1)

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