MAGNI-TECH INDUSTRIES BHD

Target price: RM6.40

PUBLIC Investment Bank continues to like Magni-Tech for its undemanding valuation, (currently at eight times 2018 core earnings) solid fundamentals with a net cash position of RM192.9mil or RM1.19 per share as at financial year (FY) ended April 30 and an attractive dividend yield of an estimated 3.8% for fiscal 2019.

The brokerage has maintained its “outper- form” call on Magni-Tech, with an unchanged target price of RM6.40.

It expects Magni-Tech to register a better performance in FY19, supported by the new capacities from the two new manufacturing facilities and a more stablised foreign exchange movement.

One of the two new planned manufacturing facilities has started productions since the second quarter of 2018, while the second factory is still under construction

Magni-Tech reported lower revenue and core net profit of RM220.6m (minus 26.4% y-o-y) and RM23.9m (minus 38.7% y-o-y) respectively for the fourth quarter of FY18.

Overall, FY18 was a weak-performing year with revenue and core net profit both declined by 5.3% y-o-y and 11.1% y-o-y respectively, mainly impacted by lower sale orders received, higher operating expenses (particularly labour costs) and unfavorable foreign exchange movements.

The results were within expectations. Magni-Tech declared a lower dividend of five sen per share for the fourth quarter of financial year 2018, bringing full-year dividend to 20 sen, which represented a 35.6% payout for FY18.