Laos plant to boost earnings for Mega First

Source: The Star

PETALING JAYA: Mega First Corp Bhd's 91.25%-owned Dons Sahong hydropower plant in Laos is expected to see improved earnings in the upcoming quarters, driven by higher water levels.

According to AmInvestment Bank Research (AmResearch), this improvement is complemented by the absence of maintenance expenses and the commissioning of the fifth turbine in the third quarter of this year (3Q24).

Following an engagement with Mega First, AmResearch reported that the equivalent availability factor (EAF) is currently at 92%, up from 79.3% in 1Q24. The research outfit said the EAF is anticipated to reach 100% before the end of June.

"The new concession agreement and power purchase agreement (PPA) for Dons Sahong hydropower plant's fifth turbine are expected to be completed soon.

"Key parameters include tariffs, taxation rates, and concession period. We believe that the PPA would be positive for Mega First," noted AmResearch.

Meanwhile, Edenor Technology Group, a joint venture between Mega First and 9M Technologies Sdn Bhd, was guided to record smaller losses in 2Q24 compared to the share of loss of RM13.9mil in 1Q24.

In 1Q24, the plant was partly shut down for maintenance works, recording an average utilisation rate of 65%, which was the lowest ever.

Additionally, earlier in May, Mega First has completed the acquisition of a 64% stake in CSC Agriculture Holdings, a company that is involved in plantation and the wholesale of fruits and vegetables, for RM25mil.

Maybank IB Research said Mega First will start recognising CSC's contribution from 3Q24 onwards.

"We understand that CSC's earnings are expected to be very small as most of its farms are not mature yet," it added.