Don Sahong delivers
No surprises
4Q21 results were in line with our/market expectations, with Don Sahong resuming full operation following scheduled turbine maintenance in 3Q21. Dividend was expectedly tepid as management continues to conserve cash for potential acquisitions. We still expect management to pursue value-accretive RE opportunities. Maintain BUY with a marginally lower MYR4.20 TP (-2%).
Results in line
Excluding unrealised forex and fair value adjustments, Mega First’s 4Q21 core net profit of MYR100m (+10% YoY, +12% QoQ) brings FY21 core net profit to MYR349m (+6% YoY), 3% above our forecasts and almost spot on with consensus. Reported earnings include a MYR125.1m one-off unallocated bargain difference in the associate income line (from the acquisition of Emery Oleochemical), which we have excluded from our core earnings. A 3.5sen DPS was declared, bringing full year DPS to 6.75sen (+8% YoY), representing a 14% payout ratio.
Sequentially higher for all segments
Renewable energy EBIT was higher QoQ due to a base effect (recall Don Sahong revenue underwent scheduled turbine maintenance in 3Q21). Don Sahong’s availability improved to 97.5% in 4Q21, from 90.1% in 3Q21. Meanwhile, resources EBIT was higher QoQ due to domestic demand recovery. Packaging EBIT was also higher QoQ due to the full-quarter consolidation of Stenta (two months contribution in 3Q21) and higher earnings and Hexachase.
Revising forecasts
We have lowered our FY22/23 net profit forecasts by 1%/10% as we delay the commissioning of Don Sahong’s fifth turbine from FY23 to FY24 in line with guidance, and introduce FY24 forecasts. Our TP (based on a sum-of-parts and includes MYR0.25/share of new projects) is marginally lowered to MYR4.20 (-2%). Management will host a results call this afternoon.