MFCB (3069) - MFCB: An Attractive Value Stock


Background

Mega First Corporation Berhad (MFCB) has three divisions:

  • Power segment builds, owns and operates power plants.
  • Property segment is engaged in property development and investment.
  • Limestone segment is engaged in quarrying of limestone, manufacturing and trading of calcium carbonate powder, lime based products and calcium silicate bricks. 

 MFCB's 3 Main Businesses

 Historical Financial Performance

The last 10 years P&L shows  a steady growth in revenue from FY2009 to  FY2014. Profits grew at a rapid pace from FY2008 to 2013 before plateauing. The drop in revenue & slight dip in PBT in FY2015 was due to weakness in all 3 segments of the group.


Chart 1: MFCB's last 10 years' P&L


Table 1: MFCB's segmental results for FY2015 & FY2014

Recent Financial Performance

Despite poorer performance in FY2015, things improved in 1Q2016. Total revenue (excluding investment segment performance) grew 63% y-o-y or 40% q-o-q to RM209 million. PBT (excluding investment segment performance & unallocated expenses) grew 75% y-o-y or 23% q-o-q to RM52 million.   


Chart 2: MFCB's last 11 quarters' P&L 


Chart 2: MFCB's last 11 quarters' P&L and segmental results for 1Q2016, 4Q2015 & 1Q2015

Financial Position

MFCB's financial position as at 31/3/2016 is deemed healthy, with current ratio at 2.7x and total liabilities to equity at 0.2x.

Valuation

MFCB (closed at RM1.84 yesterday) is now trading at gross and diluted PER of 5.2x and 8.7x, respectively. At these PERs, MFCB is deemed quite attractive.


Table 2: EPS & PER Computation

Technical Outlook

MFCB has been consolidating for the past 18 months since it made a high of RM2.20 in October 2014. The consolidation takes the pattern of an expanding triangle, ABCD.


 Chart 3: MFCB's daily chart as at June 2, 2016_3.30 (Source: Kentrade)

MFCB has in fact broken below its tentative long-term uptrend line,ss at RM1.77-1.78.


Chart 4: MFCB's weekly chart as at June 2, 2016_3.30 (Source: Kentrade)

The monthly chart shows MFCB to be in a gradual long-term uptrend line, SS. All 3 indicators - MACD, ADX and Stochastic - are down. Like the share price, they have been trending lower for sometimes. The technical outlook is still bearish. The repair will begin with the stock recovering above the long-term uptrend line, ss at RM1.80.

 
Chart 5: MFCB's monthly chart as at June 2, 2016_3.30 (Source: Kentrade)

Conclusion

Based on good financial performance & position and attractive valuation, MFCB is a good stock for long-term investment. Its next upleg may not begin anytime soon in view of the negative technical outlook. Thus, any accumulation of the stock may be carried out in a gradual manner.

Note:
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, MFCB.

MFCB (3069) - MFCB: An Attractive Value Stock
http://nexttrade.blogspot.my/2016/06/mfcb-attractive-value-stock.html