Mega First Corp. Bhd. · MYX:MFCB
Mega First Corp. Bhd — Q3 2022 Earnings Presentation
67 slides from Mega First Corp. Bhd's earnings presentation, Nov 21, 2022
Slide 1: 3Q2022 Results Briefing
3Q2022 RESULTS BRIEFING 21 November 2022
Slide 2: Agenda
AGENDA 1. 3Q2022 Financial Review: - Earnings Review - Balance Sheet Review - Cash Flow Review - Gearing Position - JV Edenor Technology - Other Updates 2. Prospects for 4Q2022 For reference (updated): 3. Renewable Energy Division 4. Packaging Division 5. Resources Division 6. Investment in Joint Ve
Slide 3: 3Q2022 Earnings Overview
3Q2022 EARNINGS OVERVIEW Key Takeaway: § Revenue +60% to RM372 mil; PBT +36% to RM146 mil. § All divisions registered both top and bottom line growth. § Share of profit from JV/Associate RM12.3 mil, including RM16.9 mil one off unadjusted difference between Edenor unaudited and audited FS. § Edenor
Slide 4: Earnings Review - Renewable Energy Division
EARNINGS REVIEW -RENEWABLE ENERGY DIVISION 3Q2022 vs 3Q2021 § Revenue +18%: hydro energy sales volume +9%, currency gain +7%, hydro tariff +1%. § EAF improved to 98.2% due to deferment of turbine maintenance to February 2023. § Solar revenue RM1.9 mil (3Q2021: RM1.4 mil) on higher installed C&I sola
Slide 5: Renewable Energy Division - Don Sahong
RENEWABLE ENERGY DIVISION -DON SAHONG Don Sahong: January to September 2022 Pakse Water Level and EAF Pakse Water Level - 2022 vs 2021 vs 2020 Capacity Factor/EAF- 2022 vs 2021 vs 2020 10.00 110.0% 9.00 105.0% 8.00 100.0% 7.00 95.0% 6.00 90.0% 5.00 85.0% 4.00 80.0% 3.00 75.0% 2.00 70.0% 1.00 65.0% 0
Slide 6: Earnings Review - Resources Division
EARNINGS REVIEW – RESOURCES DIVISION 3Q2022 vs 3Q2021 § Lime product sales volume +61%: low base effect (3Q2021 was adversely affected by customer maintenance shutdown) and recovery of economic activities as the region transitioned from Covid-19 pandemic phase to endemic phase. § ASP +25%: progressi
Slide 7: Earnings Review - Packaging Division
EARNINGS REVIEW – PACKAGING DIVISION 3Q2022 vs 3Q2021 § Revenue +65%: Hexachase +70% to RM51 mil, full quarter Stenta revenue RM54 million (3Q2021: 2-months). § Stronger demand for Hexachase flexible packaging products. § Stenta’s earnings sequentially relatively stable since acquisition at end July
Slide 8: Balance Sheet Review
BALANCE SHEET REVIEW MEGA FIRST CORPORATION BERHAD - NOV 2022 7
Slide 9: Cash Flow Review
CASH FLOW REVIEW MEGA FIRST CORPORATION BERHAD - NOV 2022 8
Slide 10: Gearing Position
GEARING POSITION MEGA FIRST CORPORATION BERHAD - NOV 2022 9
Slide 11: Edenor Technology JV
EDENOR TECHNOLOGY JV MEGA FIRST CORPORATION BERHAD - NOV 2022 10
Slide 12: Other Updates
OTHER UPDATES Ø 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. - RM66.6 million revenue in 9M2022 presented under “Investment Holding & Others”
Slide 13: Prospects for 4Q2022
PROSPECTS FOR 4Q2022 Ø Key challenges in 4Q2022: • Slowing consumer demand on heightened recession risk; • Intensifying competition due to slowing consumption; • High inventory level in supply chain; Unwinding process will shape demand change in short term; • Rising interest rates environment • Tigh
Slide 14: Prospects for 4Q2022 (Cont'd)
PROSPECTS FOR 4Q2022 (CONT’D) Renewable Energy Division Ø EAF for 4Q2022 is expected to be around 97-98% (similar to 4Q2021), bringing the full year average EAF to around 94-95% (2021: 91%). Ø Don Sahong earnings are denominated in USD. The reported earnings will continue to be influenced by the MYR
Slide 15: Renewable Energy Portfolio Summary
PROSPECTS FOR 4Q2022 (CONT’D) Renewable Energy Portfolio Summary Completed capacity: 275 MW - Hydro 260 MW - Solar 15 MW Capacity secured/under construction 93 MW - Hydro 65 MW - Solar 24 MW Total Capacity 364 MW - Hydro 325 MW - Solar 39 MW MEGA FIRST CORPORATION BERHAD - NOV 2022 13
Slide 16: Renewable Energy Division - Expansion
RENEWABLE ENERGY DIVISION – EXPANSION Renewable Energy Projects On Hand Ø 65 MW 5th turbine expansion of Don Sahong costing approx. US$70-75 million or approx. US$1.1-1.2mil/MW (vs US$1.4 mil/MW for the first 4 turbines). Construction commenced in Dec 2021. Expected completion in 3Q2024. Expected EA
Slide 17: Renewable Energy Division - 5th Turbine Construction Progress
RENEWABLE ENERGY DIVISION – 5TH TURBINE CONSTRUCTION PROGRESS MEGA FIRST CORPORATION BERHAD - NOV 2022 15
Slide 18: Renewable Energy Division - 5th Turbine Construction Progress
RENEWABLE ENERGY DIVISION – 5TH TURBINE CONSTRUCTION PROGRESS MEGA FIRST CORPORATION BERHAD - NOV 2022 16
Slide 19: Renewable Energy Division - 5th Turbine Construction Progress
RENEWABLE ENERGY DIVISION – 5TH TURBINE CONSTRUCTION PROGRESS MEGA FIRST CORPORATION BERHAD - NOV 2022 17
Slide 20: Prospects for 4Q2022 (Cont'd) - Resources Division
PROSPECTS FOR 4Q2022 (CONT’D) Resources Division Ø Margin pressure to ease in 4Q2022 on softening petcoke prices and the strong USD (the division’s main export currency). Ø Strong economic headwinds expected to crimp regional demand growth for lime products. Ø Continuous review of pricing and custom
Slide 21: Prospects for 4Q2022 (Cont'd) - Packaging Division
PROSPECTS FOR 4Q2022 (CONT’D) Packaging Division Ø Consumer spending power curtailed by escalating cost of living and rapidly rising interest rates. Ø Inventory remains high in supply chain and will unwind on slowing demand outlook. These will dampen demand for some of our packaging products in the
Slide 22: Prospects for 4Q2022 (Cont'd) - Edenor Technology Group
PROSPECTS FOR 4Q2022 (CONT’D) Edenor Technology Group (equity interest: 50%) Ø Near term challenges: - heightened global recession risk slowing industry demand; - Feedstock (CPKO, RBDPS) price volatility; - Foreign exchange volatility, especially MYR:USD; - Indonesia’s export tax structure. Ø Medium
Slide 23: (Remaining Slides for Reference - Updated)
(Remaining Slides for Reference - Updated) MEGA FIRST CORPORATION BERHAD - NOV 2022 22
Slide 24: Renewable Energy
RENEWABLE ENERGY DON SAHONG HYDROPOWER & COMMERCIAL AND INDUSTRIAL SOLAR MEGA FIRST CORPORATION BERHAD - NOV 2022 22
Slide 25: Renewable Energy Division - Don Sahong
RENEWABLE ENERGY DIVISION – DON SAHONG MEGA FIRST CORPORATION BERHAD - NOV 2022 23
Slide 26: 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 27: Renewable Energy Division - Current Portfolio
RENEWABLE ENERGY DIVISION – CURRENT PORTFOLIO MEGA FIRST CORPORATION BERHAD - NOV 2022 25
Slide 28: Renewable Energy Division - Current Portfolio
RENEWABLE ENERGY DIVISION – CURRENT PORTFOLIO MEGA FIRST CORPORATION BERHAD - NOV 2022 26
Slide 29: 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 - NOV 2022 27
Slide 30: Renewable Energy Division - Current Portfolio
RENEWABLE ENERGY DIVISION – CURRENT PORTFOLIO MEGA FIRST CORPORATION BERHAD - NOV 2022 28
Slide 31: Renewable Energy Division - Financial Highlights
RENEWABLE ENERGY DIVISION – FINANCIAL HIGHLIGHTS MEGA FIRST CORPORATION BERHAD - NOV 2022 29
Slide 32: 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 33: 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 34: Packaging
PACKAGING MEGA FIRST CORPORATION BERHAD - NOV 2022 47
Slide 35: 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 36: 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 37: Packaging Division - State-of-Art Machinery
PACKAGING DIVISION – STATE-OF-ART MACHINERY Fuji Kikai Printing Machine New Fuji Kikai 14 colours Rotogravure Printing Machine commissioned in 1Q2022 MEGA FIRST CORPORATION BERHAD - NOV 2022 35
Slide 38: Packaging Division - State-of-Art Machinery
PACKAGING DIVISION – STATE-OF-ART MACHINERY Super Combi 5000 New Super Combi 5000 Lamination Machine MEGA FIRST CORPORATION BERHAD - NOV 2022 35
Slide 39: 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 - NOV 2022 37
Slide 40: Packaging Division - State-of-Art Machinery
PACKAGING DIVISION – STATE-OF-ART MACHINERY SOS Machine Flat & Satchel Bag Machine MEGA FIRST CORPORATION BERHAD - NOV 2022 38
Slide 41: 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 - NOV 2022 39
Slide 42: Packaging Division - State-of-Art Machinery
PACKAGING DIVISION – STATE-OF-ART MACHINERY Reifenhauser LLDPE Line Vacuum Metallizer MEGA FIRST CORPORATION BERHAD - NOV 2022 40
Slide 43: 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 - NOV 2022 41
Slide 44: Packaging Division - Product Range
PACKAGING DIVISION – PRODUCT RANGE MEGA FIRST CORPORATION BERHAD - NOV 2022 42
Slide 45: Packaging Division - Product Range
PACKAGING DIVISION – PRODUCT RANGE MEGA FIRST CORPORATION BERHAD - NOV 2022 43
Slide 46: Packaging Division - Product Range
PACKAGING DIVISION – PRODUCT RANGE MEGA FIRST CORPORATION BERHAD - NOV 2022 44
Slide 47: Packaging Division - Customer Base
PACKAGING DIVISION – CUSTOMER BASE MEGA FIRST CORPORATION BERHAD - NOV 2022 45
Slide 48: Packaging Division - Financial Highlights
PACKAGING DIVISION – FINANCIAL HIGHLIGHTS MEGA FIRST CORPORATION BERHAD - NOV 2022 46
Slide 49: Resources
RESOURCES LARGEST QUICKLIME PRODUCER IN MALAYSIA MEGA FIRST CORPORATION BERHAD - NOV 2022 47
Slide 50: Resources Division
RESOURCES DIVISION MEGA FIRST CORPORATION BERHAD - NOV 2022 48
Slide 51: 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 52: 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 - NOV 2022 50
Slide 53: 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 54: 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 55: Investment in Edenor Technology
INVESTMENT IN EDENOR TECHNOLOGY MEGA FIRST CORPORATION BERHAD - NOV 2022 53
Slide 56: 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 57: 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 58: Investment in Edenor Technology - Plant Site
INVESTMENT IN EDENOR TECHNOLOGY – PLANT SITE MEGA FIRST CORPORATION BERHAD - NOV 2022 56
Slide 59: Investment in Edenor Technology - Plant Layout
INVESTMENT IN EDENOR TECHNOLOGY – PLANT LAYOUT MEGA FIRST CORPORATION BERHAD - NOV 2022 57
Slide 60: Investment in Edenor Technology - TPG Plant
INVESTMENT IN EDENOR TECHNOLOGY – TPG PLANT MEGA FIRST CORPORATION BERHAD - NOV 2022 58
Slide 61: 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 62: Investment in Edenor Technology - Financial Outlook
INVESTMENT IN EDENOR TECHNOLOGY – FINANCIAL OUTLOOK § Post-acquisition 2-month Consolidated Edenor earnings: Ø Profit RM244 million (Including one-off unallocated bargain gain recognised as income) Ø Loss RM6.6 million (Excluding unallocated bargain gain) Ø Reduced 2-month loss despite maintenance s
Slide 63: Plantation
PLANTATION MONDULKIRI, CAMBODIA MEGA FIRST CORPORATION BERHAD - NOV 2022 47
Slide 64: 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 65: 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 • Estimated plantable area: • Target to complete planting by at 30 September 2022: 4,500 hectares end
Slide 66: 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 67: Thank You
THANK YOU 71
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