Analysts still positive on Magni’s long-term prospects

KUCHING: While earnings weakness is expected following the lockdown in Vietnam, analysts are still positive on Magni-Tech Industries Bhd’s (Magni) long-term prospects driven by the growing awareness on healthcare and fitness, which should lead to higher demand for sportswear.

The research arm of Public Investment Bank Bhd (PublicInvest Research) recapped despite posting a revenue growth of 4.7 per cent year on year (yo-y) to RM305.6 million for the first quarter of financial year 2022 (1QFY22), Magni’s net profit fell by 21.3 per cent y-o-y to RM21 million.

“The weaker set of numbers was mainly dragged by the unfavourable operating environment given the stricter lockdown orders in Malaysia and Vietnam,” PublicInvest Research gathered.

“After adjusting for the oneoff items, Magni’s core net profit stood at RM21.6 million.”

The results were below PublicInvest Research’s estimates, accounting for 18 per cent of the research arm’s forecast.

“While we are expecting earnings to remain weak in the coming quarter due to the extension of lockdown measures in Vietnam, we believe the easing of restrictions beyond September will be positive for Magni as there will be less disruption to its manufacturing activities.

“We understand that Magni is actively engaging with its customers and are looking to ramp up its production when operation resumes.”

In the long run, PublicInvest Research believed that with the growing popularity for athleisure apparel and the increase in consumers’ awareness about health and fitness, it should continue to drive the demand for sportswear globally.