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Key Statistics

Bloomberg Ticker MTI MK

Masa Ticker / Stock Code MAGNI/7087

Shares Issued (m) 162.7Market Capitalisation (RM’m)  727.4

52 Week Hi/Lo Price (RM) 4.66/2.041

Avg Trading Volume (3-mth) 231,947

Est Free Float (m) 63.1

YTD Returns (%) 0.43

Beta (x) 0.76

Major Shareholders (%)

Tan Poay SengKP Holdings Sdn Bhd

Perbadanan Nasional Bhd

Kamarudin b Jaffar

Berjaya Corp Bhd

18.4813.09

7.44

6.64

6.28

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est Wing, Level 13,

Berjaya Times Square,

No 1, Jalan Imbi,

55100 Kuala Lumpur

el: (03) 21171888

Fax: (03) 21427678For Internal Circulation Only

KDN PP8927/07/2013(032977) 

Consumer Products

22 Mar 2016

Results Update

Non RatedCurrent Price RM 4.47

Target Price RM 5.30

Analyst: Brian Yeoh

Email: brianyeoh@interpac.com.my

1-Year Share Price Performance 

2.00

2.50

3.00

3.50

4.00

4.50

5.00

 

Magni-Tech Industries Bhd 

We retain our views on Magni-Tech Industries Bhd (Magni) with a target price of RM5.30

(+18.6%) upside based on a SoP valuation. This is based on a revised FY16/17 PER of 10x for the

garment segment (previously 14x) and a 5x PER to its Packaging segment. Its main local peer,

Prolexus's share price is trading at a 12mth trailing PER of 8x, but we have assigned a premium

valuation to Magni despite an unchanged TP vis-à-vis the Apparel Manufacturers sector mean,

ahead of the upcoming expansion plans mentioned in our previous briefing note. Aside that, we

believe there is still strong earnings visibility coming from:- 1) strong earnings growth from Nike-

we expect the company to post Q3 profits that outstrips street forecasts once again, 2) Trans

Pacific Partnership Agreement gains for “Made in Malaysia/Vietnam” clothing, 3) Bri ght long-

term prospects in the apparels industry, 4) strong cashflows and balance sheet.

Results Review 

Magni reported net earnings of RM26.1mil in 3QFY16, an increase of 49.0% YoY, and 20.5%QoQ.

Similarly, revenues stood at RM268.9mil, climbed 34.2% YoY and 36.3% QoQ. Topline-wise, the

garment segment continues its stellar performance, as segment revenues grew +34.7%YoY, +36.3%

QoQ on the back of higher sales orders received. Margins are still holding up very well mainly

attributed to favourable currency exchange rate, positive results from on-going productivity

improvements and continuing lean manufacturing measures. Going forward, we revise our

earnings forecasts for FY16/17 and FY17/18f as the company's 9MFY16 earnings have already

exceeded our full year forecast net income of RM63mil. Our FYEApr16e and FYEApr17e earnings

estimates have had to be upgraded by 31.3% and 34.6% respectively. In conjunction with the

earnings announcement, Magni declared a second single tier interim dividend of 3 sen per

ordinary share and a single-tier special dividend of 2 sen per ordinary share, making the total

payout FYTD 13 sen.

Table 1 : Earnings Forecasts

FYE April FY13 FY14 FY15 FY16(f) FY17(f)

Revenue (m) 565.8 651.3 716.4 890.0 940.0

Pretax Profit (m) 48.0 55.4 69.4 108.7 126.5

Net Profit (m) 35.8 42.0 52.2 82.7 96.5

EPS (sen) 22.0 25.8 32.1 50.8 59.3

Pretax margin (%) 8.5 8.5 9.7 12.2 13.5

Net Profit margin (%) 6.3 6.4 7.3 9.3 10.3

PER (x) 20.3 17.3 13.9 8.8 7.5DPS (sen) 13.0 13.0 15.0 15.0 18.0

Dividend Yield (%) 2.9 2.9 3.4 3.4 4.1

ROE (%) 18.2 19.0 20.6 28.9 30.6

ROA (%) 14.0 14.5 16.3 23.4 24.8

Net Gearing Ratio (%) Net Cash Net Cash Net Cash Net Cash Net Cash

BV/Share 1.27 1.44 1.68 2.03 2.51

Price/Book Ratio (x) 3.51 3.10 2.67 2.20 1.78

#Readers are advised to take note that Inter-Pacific Research Sdn Bhd is a member of the Berjaya

Corporation Bhd Group which holds 6.28% in Magni-Tech Industries Bhd. For further information,

 please refer to the Disclaimer on Page 3.

Powerful Stitch!

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Table 4: Local Apparel Industry Peers Comparison (as at 22 Mar 2016)

Mkt Cap Price EPS (RM) P/E (x) ROE Div Yield

Company (RM mil) (RM) trailing fwd trailing Fwd (%) (%)

PADINI HOLDINGS BERHAD 1,368.5 2.08 0.17 0.17 12.48 12.53 26.3 4.81

MAGNI-TECH INDUSTRIES BHD 727.4 4.47 0.49 0.51 9.12 10.0 26.2 1.79

PROLEXUS BHD 226.5 1.97 0.22 0.26 8.84 9.6 21.3 1.37

CAELY HOLDINGS BHD 40.8 0.51 0.09 n/a 5.73 n/a 6.1 1.96

CHEETAH HOLDINGS BHD 51.0 0.43 0.01 n/a 30.07 n/a 1.3 1.74

Simple Average 0.196 0.31 13.25 10.7

Source: Bloomberg, Inter-Pacific

Table 3: Segment Results

3Q16 3Q15 YoY chg (%) 2Q16 QoQ chg (%)

Packaging 40.88 31.1 31.4 30.0 36.3

Garment Manufacturing 228.04 169.3 34.7 167.3 36.3

Total Revenue 268.92 200.40 34.2 197.35 36.3

Packaging 1.82 1.6 13.8 1.3 40

Garment Manufacturing 31.75 21.1 50.5 26.5 19.8

Unallocated corporate expenses (0.08) 0 n/a

Total results 33.50 22.70 47.6 27.8 20.5

Margins (%)

Packaging 4.9 5.1 4.3

Garment Manufacturing 13.7 12.5 15.8

Note: Segment Data are Inter-Pacific estimates as earnings release does not net out inter-segment transactions

Source: Company, Inter-Pacific

Table 2: Financial Highlights

FYE April (RM' mil) 3Q16 3Q15 YoY chg (%) 2Q16 QoQ chg (%)

Revenue 268.9 200.4 34.2 197.3 36.3

Profit before tax 34.2 23.1 47.9 28.7 19.1

Tax Expense -8.1 -5.6 44.5 -7.0 14.8

PATAMI 26.1 17.5 49.0 21.6 20.5EBITDA 38.4 27.4 39.9 24.5 56.9

PBT margin (%) 12.7 11.5 10.4 14.5 -12.4

PATAMI margin (%) 9.7 8.7 11.5 11.0 15.5

EPS (sen) 16.0 16.1 -0.6 13.3 20.5

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IMPORTANT: This report has been prepared from sources that are believed to be reliable but we do not hold ourselves responsible for its completeness and accuracy.

All opinions and estimates in this report are subject to change without notice. We do not accept any liability that may arise from the use of information in this report.

Inter-Pacific Research SdnBhd  and or its associates may from time to time have interest and/or underwriting commitments in the company being reported. This

report is for internal circulation only and the contents or any part thereof cannot be reproduced in any manner whatsoever except with the prior written consent of

Inter-Pacific Research Sdn Bhd.

Published and Printed by:

Inter-Pacific Research SdnBhd (449005-X)

West Wing, Level 13,Berjaya Times Square,

 No.1, JalanImbi,

55100 Kuala Lumpur

General Line : 03-2117 1888 Fax : 03-2142 7678

Ratings System

Ratings: Description:

BUY Total return is expected to exceed 15% in the next 12 months

NEUTRAL Total return is expected to be between above  –15% to 15% in the next 12 months

SELL Total return is expected to be below -15% in the next 12 months

Abbreviation 

Abbreviation Definition Abbreviation Definition

PER Price Earnings Ratio CAGR Compounded Annual Growth Rate

PEG PER to Growth CAPEX Capital Expenditure

EPS Earnings per Share DPS Dividend per Share

FYE Financial Year End ROA Return on Asset

FY Financial Year ROE Return on Equity

CY Calendar Year PBT Profit Before Tax

MoM Month-on-Month PAT Profit After Tax

QoQ Quarter-on-Quarter EV Enterprise Value

YoY Year-on-Year EBIT Earnings Before Interest And TaxYTD Year-to-Date EBITDA EBIT Depreciation &Amortisation

p.a. Per Annum WACC Weighted Average Cost of Capital

DCF Discounted Cash Flow NTA Net Tangible Asset

FCF Free Cash Flow BV Book Value

NAV Net Asset Value