‘Outperform’ stance kept on Mega First

Mega First Corp Bhd’s top line is expected to grow threefold if its proposed acquisition of a 64 per cent stake in CSC Agriculture Holdings Sdn Bhd is completed.

Public Investment Bank Bhd (PublicInvest) said Mega First’s acquisition of CGC Agriculture would value the company at RM39 million.

“Despite minimal earnings contribution, the management believes that it could become a growth driver for the group and has set a target of growing the top line by more than three times.

“For this year, we expect to see negligible impact on the group’s bottom line,” it said in a note.

Mega First recently announced it had entered into a share subscription agreement with CSC Agriculture and its existing shareholders to subscribe for a 64 per cent stake for RM25 million.

This will allow Mega First to tap the latter’s agricultural platform for its modern farming business in Perak.

CSC Agriculture has its own farms in Pahang and Johor, with existing distribution channels in the southern region.

Under the plan, Mega First will ride on the CSC Agriculture’s agricultural knowledge to venture into modern farming in Perak by applying ecofriendly coco peat instead of soil.

PublicInvest has maintained its “outperform” call on Mega First with a higher target price of RM5.36 from RM5.28 previously.

For this year, we expect to see negligible impact on the group’s bottomline. PUBLIC INVESTMENT BANK BHD