Mega First Corp. Bhd. · MYX:MFCB
Mega First Corp. Bhd — Q2 2022 Earnings Presentation
67 slides from Mega First Corp. Bhd's earnings presentation, Aug 18, 2022
Slide 1: 2Q2022 Results Briefing
2Q2022 RESULTS BRIEFING 18 AUGUST 2022
Slide 2: Agenda
AGENDA 1. 2Q2022 Financial Review: - Earnings Review - Balance Sheet Review - Cash Flow Review - Gearing Position - Edenor Technology JV - Other Updates 2. Prospects for 2H2022 For reference (updated): 3. Renewable Energy Division 4. Packaging Division 5. Resources Division 6. Investment in Joint Ve
Slide 3: 2Q2022 Earnings Overview
2Q2022 EARNINGS OVERVIEW Key Takeaway: ▪ Revenue +59.7% to RM331.9 million: Higher sales contribution across all three core divisions. ▪ PBT +21.8% to RM126.3 million: RE +9.6%, Stenta contribution, Hexachase +161%, and share of profit from joint ventures and associates. ▪ 9.1% sequential improvemen
Slide 4: Earnings Review - Renewable Energy Division
EARNINGS REVIEW -RENEWABLE ENERGY DIVISION 2Q2022 vs 2Q2021 ▪ Revenue +9.6%: energy sales volume +3%, hydro tariff +1%, currency gain +5.4%. ▪ EAF improved on higher average water levels. ▪ Solar revenue RM1.5 million (2Q2021: RM1.1 million) on higher C&I solar capacity. ▪ PBT +9.5% on higher hydro
Slide 5: Renewable Energy Division - Don Sahong
RENEWABLE ENERGY DIVISION -DON SAHONG Don Sahong: Jan to Jun 2022 Pakse Water Level and EAF MEGA FIRST CORPORATION BERHAD - AUG 2022 3
Slide 6: Earnings Review - Resources Division
EARNINGS REVIEW – RESOURCES DIVISION 2Q2022 vs 2Q2021 ▪ Lime product sales volume +25.7%: recovery of both domestic and regional economic activities as we transitioned from Covid-19 pandemic to endemic phase. ▪ ASP +16.3%: progressive selling price adjustments to defray cost increases, especially fu
Slide 7: Earnings Review - Packaging Division
EARNINGS REVIEW – PACKAGING DIVISION 2Q2022 vs 2Q2021 ▪ Revenue +236%: Hexachase +59.1% to RM47.7 million, Stenta RM53.0 million. ▪ Stronger demand for Hexachase paper bags and flexible packaging products from new and existing customers. ▪ Stenta’s earnings contribution sequentially relatively stabl
Slide 8: Balance Sheet Review
BALANCE SHEET REVIEW MEGA FIRST CORPORATION BERHAD - AUG 2022 7
Slide 9: Cash Flow Review
CASH FLOW REVIEW MEGA FIRST CORPORATION BERHAD - AUG 2022 8
Slide 10: Gearing Position
GEARING POSITION MEGA FIRST CORPORATION BERHAD - AUG 2022 9
Slide 11: Edenor Technology JV
EDENOR TECHNOLOGY JV MEGA FIRST CORPORATION BERHAD - AUG 2022 10
Slide 12: Other Updates
OTHER UPDATES ➢ Recommencement of Serudong Power operations - Operations were recommenced to facilitate future sale of the subsidiary. - All associated costs are borne by 3rd party investors. - Achieved COD in May 2022. - RM24.4 million revenue in 2Q2022 presented under “Investment Holding & Others”
Slide 13: Prospects for 2H2022
PROSPECTS FOR 2H2022 ➢ Key challenges in 2H2022: • Heightened recession risk; • Intensifying competition due to slowing consumption demand; • Rising petcoke fuel costs; • Tight labour market. ➢ The Group navigates this challenging environment by exercising prudence, proactiveness and decisiveness in
Slide 14: Prospects for 2H2022 (Cont'd)
PROSPECTS FOR 2H2022 (CONT’D) Renewable Energy Division ➢ Annual turbine maintenance to push back several months from Aug/Sep to Feb next year on EDL request. ➢ Rescheduling of maintenance expected to raise EAF by 4.2% to 98% in 2H2022. ➢ Continued weakness in RM means higher translated RM earnings.
Slide 15: Renewable Energy Portfolio Summary
PROSPECTS FOR 2H2022 (CONT’D) Renewable Energy Portfolio Summary MEGA FIRST CORPORATION BERHAD - AUG 2022 13
Slide 16: Renewable Energy Division - Expansion
RENEWABLE ENERGY DIVISION – EXPANSION Renewable Energy Projects On Hand ➢ 65 MW 5th turbine expansion of Don Sahong costing approx. US$65-70 million or approx. US$1-1.1mil/MW (vs US$1.4 mil/MW for the first 4 turbines). Construction commenced in Dec 2021. Expected completion in 3Q2024. Expected EAF
Slide 17: Renewable Energy Division - 5th Turbine Construction Progress
RENEWABLE ENERGY DIVISION – 5TH TURBINE CONSTRUCTION PROGRESS MEGA FIRST CORPORATION BERHAD - AUG 2022 15
Slide 18: Renewable Energy Division - 5th Turbine Construction Progress
RENEWABLE ENERGY DIVISION – 5TH TURBINE CONSTRUCTION PROGRESS MEGA FIRST CORPORATION BERHAD - AUG 2022 16
Slide 19: Renewable Energy Division - 5th Turbine Construction Progress
RENEWABLE ENERGY DIVISION – 5TH TURBINE CONSTRUCTION PROGRESS MEGA FIRST CORPORATION BERHAD - AUG 2022 17
Slide 20: Prospects for 2H2022 (Cont'd) - Resources Division
PROSPECTS FOR 2H2022 (CONT’D) Resources Division ➢ Challenges faced in 1H2022 to continue into 2H2022. ➢ Continuous review of pricing strategy and customer allocation to defray cost increases while defending sales volume. ➢ Expects 2H2022 performance to be largely in line with 1H2022. MEGA FIRST COR
Slide 21: Prospects for 2H2022 (Cont'd) - Packaging Division
PROSPECTS FOR 2H2022 (CONT’D) Packaging Division ➢ Aggressive monetary tightening through successive interest rate hikes led by Fed is expected to dampen consumption demand in 2H2022. ➢ Hexachase to continue recording robust year-on-year growth rate in 2H2022. ➢ But we now expect lower sequential gr
Slide 22: Prospects for 2H2022 (Cont'd) - Joint Venture and Associates
PROSPECTS FOR 2H2022 (CONT’D) Joint Venture and Associates ➢ Edenor Technology Group (equity interest: 50%) - Recorded two quarters of profit after turning around at beginning of year. - Near term challenges: heightened global recession risk, feedstock price volatility, Indonesia’s export tax struct
Slide 23: Renewable Energy
(Remaining Slides for Reference - Updated) RENEWABLE ENERGY DON SAHONG HYDROPOWER & COMMERCIAL AND INDUSTRIAL SOLAR MEGA FIRST CORPORATION BERHAD - AUG 2022 22
Slide 24: Renewable Energy Division - Don Sahong
RENEWABLE ENERGY DIVISION – DON SAHONG MEGA FIRST CORPORATION BERHAD - AUG 2022 23
Slide 25: Renewable Energy Division - Don Sahong
RENEWABLE ENERGY DIVISION – DON SAHONG 260 MW run-of-river hydropower project located on the mainstream of the Mekong River in southern Laos. High projected average Energy Availability Factor (EAF) of 89% (2021: 91%) compared to other large hydro of between 40-70%. Projected average energy generatio
Slide 26: Renewable Energy Division - Current Portfolio
RENEWABLE ENERGY DIVISION – CURRENT PORTFOLIO MEGA FIRST CORPORATION BERHAD - AUG 2022 25
Slide 27: Renewable Energy Division - Current Portfolio
RENEWABLE ENERGY DIVISION – CURRENT PORTFOLIO MEGA FIRST CORPORATION BERHAD - AUG 2022 26
Slide 28: Renewable Energy Division - Don Sahong
RENEWABLE ENERGY DIVISION – DON SAHONG Don Sahong: 2021 Year to date Pakse Water Level and EAF MEGA FIRST CORPORATION BERHAD - AUG 2022 27
Slide 29: Renewable Energy Division - Current Portfolio
RENEWABLE ENERGY DIVISION – CURRENT PORTFOLIO MEGA FIRST CORPORATION BERHAD - AUG 2022 28
Slide 30: Renewable Energy Division - Financial Highlights
RENEWABLE ENERGY DIVISION – FINANCIAL HIGHLIGHTS MEGA FIRST CORPORATION BERHAD - AUG 2022 29
Slide 31: Renewable Energy Division - Strategy & Strength
RENEWABLE ENERGY DIVISION – STRATEGY & STRENGTH Strategy Leveraging current strong and stable cashflow of approx. RM500 mil per annum from existing RE portfolio to pursue selective RE opportunities in the region. Strength Strong project management/execution track record → Don Sahong completed signif
Slide 32: Renewable Energy Division - Investment Approach
RENEWABLE ENERGY DIVISION – INVESTMENT APPROACH New investments must fulfil the following criteria: 1) Attractive project IRR (varies between markets) 2) Project manageability 3) Project bankability 4) Project risk acceptability Avoid herd instinct Strict investment discipline MEGA FIRST CORPORATION
Slide 33: Packaging
PACKAGING PAPER BAGS AND FLEXIBLE PACKAGING PRODUCTS MEGA FIRST CORPORATION BERHAD - AUG 2022 32
Slide 34: Packaging Division
PACKAGING DIVISION Mission statement: “To become a leading provider of innovative, environmentally sustainable, safe and competitive packaging solutions” The division currently manufactures and sells paper bags, flexible packaging products, and stickers and labels. Global trends: Consumers and our c
Slide 35: Packaging Division - Differentiating Strategy
PACKAGING DIVISION – DIFFERENTIATING STRATEGY We develop packaging solutions that promote the use of ONLY fully recyclable materials (e.g. paper and mono- family plastic materials). Malaysia’s first and only manufacturer that only uses 100% toluene-free print ink and solvent-free lamination process
Slide 36: Packaging Division - State-of-Art Machinery
PACKAGING DIVISION – STATE-OF-ART MACHINERY New Fuji Kikai 14 colours Rotogravure Printing Machine commissioned in 1Q2022 Fuji Kikai Printing Machine MEGA FIRST CORPORATION BERHAD - AUG 2022 35
Slide 37: Packaging Division - State-of-Art Machinery
PACKAGING DIVISION – STATE-OF-ART MACHINERY New Super Combi 5000 Lamination Machine Super Combi 5000 MEGA FIRST CORPORATION BERHAD - AUG 2022 36
Slide 38: Packaging Division - State-of-Art Machinery
PACKAGING DIVISION – STATE-OF-ART MACHINERY Flat Handle Paper Bag Machine Twisted Handle Paper Bag Machine MEGA FIRST CORPORATION BERHAD - AUG 2022 37
Slide 39: Packaging Division - State-of-Art Machinery
PACKAGING DIVISION – STATE-OF-ART MACHINERY SOS Machine Flat & Satchel Bag Machine MEGA FIRST CORPORATION BERHAD - AUG 2022 38
Slide 40: Packaging Division - State-of-Art Machinery
PACKAGING DIVISION – STATE-OF-ART MACHINERY MFCB acquired Stenta in July 2021. Reifenhauser LLDPE Line Vacuum Metallizer MEGA FIRST CORPORATION BERHAD - AUG 2022 39
Slide 41: Packaging Division - State-of-Art Machinery
PACKAGING DIVISION – STATE-OF-ART MACHINERY Reifenhauser LLDPE Line Vacuum Metallizer MEGA FIRST CORPORATION BERHAD - AUG 2022 40
Slide 42: Packaging Division - State-of-Art Machinery
PACKAGING DIVISION – STATE-OF-ART MACHINERY Bruckner OPP Line High Capacity Roll Slitting and Winding Machine MEGA FIRST CORPORATION BERHAD - AUG 2022 41
Slide 43: Packaging Division - Product Range
PACKAGING DIVISION – PRODUCT RANGE MEGA FIRST CORPORATION BERHAD - AUG 2022 42
Slide 44: Packaging Division - Product Range
PACKAGING DIVISION – PRODUCT RANGE MEGA FIRST CORPORATION BERHAD - AUG 2022 43
Slide 45: Packaging Division - Product Range
PACKAGING DIVISION – PRODUCT RANGE MEGA FIRST CORPORATION BERHAD - AUG 2022 44
Slide 46: Packaging Division - Customer Base
PACKAGING DIVISION – CUSTOMER BASE MEGA FIRST CORPORATION BERHAD - AUG 2022 45
Slide 47: Packaging Division - Financial Highlights
PACKAGING DIVISION – FINANCIAL HIGHLIGHTS MEGA FIRST CORPORATION BERHAD - AUG 2022 46
Slide 48: Resources
RESOURCES LARGEST QUICKLIME PRODUCER IN MALAYSIA MEGA FIRST CORPORATION BERHAD - AUG 2022 47
Slide 49: Resources Division
RESOURCES DIVISION MEGA FIRST CORPORATION BERHAD - AUG 2022 48
Slide 50: Resources Division - Profile
RESOURCES DIVISION -PROFILE Largest quicklime producer in Malaysia with 1,960 tonne per day installed kiln capacity. Owned one of the largest limestone reserves, sufficient for more than 100 years supply. Wide industrial applications: steel, mining, pulp and paper, agriculture, construction material
Slide 51: Resources Division - Success Factors
RESOURCES DIVISION – SUCCESS FACTORS Fully integrated facilities Own high purity limestone reserves, on-site and at vicinity High and consistent lime quality Cost leadership Diversified customer base MEGA FIRST CORPORATION BERHAD - AUG 2022 50
Slide 52: Resources Division - Mission & Challenges
RESOURCES DIVISION – MISSION & CHALLENGES Mission To be the leading lime producer in the region 2015-2018: Completed massive expansion plan. +160% increase in kiln capacity 760 tonnes 1,960 tonnes per day Current plant utilisation rate approx. 80% Near term challenges High and uncertain fuel cost Hi
Slide 53: Resources Division - Mitigating Measures & Financials
RESOURCES DIVISION – MITIGATING MEASURES & FINANCIALS Mitigating measures Export diversion to markets less affected by shipping constraints Expanding customer base to mitigate impact from customer demand volatility Higher stock holdings to lower production disruption and manage price volatility Sele
Slide 54: Investment in Edenor Technology
INVESTMENT IN EDENOR TECHNOLOGY MEGA FIRST CORPORATION BERHAD - AUG 2022 53
Slide 55: Investment in Edenor Technology
INVESTMENT IN EDENOR TECHNOLOGY A 50:50 JV between MFCB and 9M Technology Sdn Bhd (RM40 million paid up capital). Set up to acquire Emery’s Asia Pacific oleochemical business from Sime Darby Plantation Berhad and PTT GC International Limited (“Acquisition’). The Acquisition was completed on 1 Novemb
Slide 56: Investment in Edenor Technology
INVESTMENT IN EDENOR TECHNOLOGY Emery’s Asia Pacific business Integrated 300,000-tonne per annum capacity oleochemical complex on a 34-acre site at Telok Panglima Garang. Original plant cost: > RM1.1 billion Plant book value @ 31 Oct 2021: approx. RM430 million Plant Acquisition Value: RM73 million
Slide 57: Investment in Edenor Technology - Plant Site
INVESTMENT IN EDENOR TECHNOLOGY – PLANT SITE MEGA FIRST CORPORATION BERHAD - AUG 2022 56
Slide 58: Investment in Edenor Technology - Plant Layout
INVESTMENT IN EDENOR TECHNOLOGY – PLANT LAYOUT MEGA FIRST CORPORATION BERHAD - AUG 2022 57
Slide 59: Investment in Edenor Technology - TPG Plant
INVESTMENT IN EDENOR TECHNOLOGY – TPG PLANT MEGA FIRST CORPORATION BERHAD - AUG 2022 58
Slide 60: Investment in Edenor Technology - Turnaround Strategy
INVESTMENT IN EDENOR TECHNOLOGY – TURNAROUND STRATEGY ▪ Full set of new management team in place. ▪ Major cultural and operational transformation underway. Key turnaround strategies: ▪ Simplify management processes: leaner, and more responsive and effective. ▪ Revamp purchasing, lower cost of goods/
Slide 61: Investment in Edenor Technology - Financial Outlook
INVESTMENT IN EDENOR TECHNOLOGY – FINANCIAL OUTLOOK ▪ Post-acquisition 2-month Consolidated Edenor earnings: ➢ Profit RM244 million (Including one-off unallocated bargain gain recognised as income) ➢ Loss RM6.6 million (Excluding unallocated bargain gain) ➢ Reduced 2-month loss despite maintenance s
Slide 62: Plantation
PLANTATION MONDULKIRI, CAMBODIA MEGA FIRST CORPORATION BERHAD - AUG 2022 53
Slide 63: Plantation Update
PLANTATION UPDATE 1) Background 2) Land 3) Plans • Main crops: coconuts & • 50-year concession on 6,428 • Planned planting in 2022: 500- macadamia hectares. 550 hectares. • Cumulative investment as • Est. plantable area: 4,500 • Target to complete planting by at 30 June 2022: RM106 hectares end of 2
Slide 64: Plantation Update - Planting Philosophy
PLANTATION UPDATE – PLANTING PHILOSOPHY “RESPECT NATURE, WORKWITH NATURE” Water and irrigation key to sustainable cultivation: (i) Protect and improve O’plai River catchment areas to collect and store rainwater; (ii) Development wetland pockets, creation of mini lakes along extensive riparian corrid
Slide 65: Plantation Update
PLANTATION UPDATE • MFCB obtained approval from the Royal Government of Cambodia for the concession of a plot of land measuring 6,428 hectares situated in Mondulkiri Province, Kingdom of Cambodia for agricultural development. • The term of the concession is 50 years, commencing from 29 April 2013. •
Slide 66: Plantation Update
PLANTATION UPDATE Main Nursery MEGA FIRST CORPORATION BERHAD - AUG 2022 65
Slide 67: Thank You
THANK YOU MEGA FIRST CORPORATION BERHAD - AUG2022 71
Mega First Corporation Berhad — Q2 2022 Earnings Presentation on 6ix