$MGB / 7595 (MGB BERHAD) - Coming off of a Record High Year, Management is still confident

I have been writing on MGB for slightly under a year now, when their precast plant had just begun to reach economies of scale and they started a JV with KSA to operate another huge precast plant in Saudi Arabia. You can read my initial writeup here, and see how the company had progressed over the year: https://cutt.ly/bek24KB3

If you scroll back on the MGB page here on Stockbit you'll be able to see all the other posts I've written too.

Anyhow...

MGB had been aiming to break the RM 1 bil milestone, but fell slightly short last year in spite of ending the year with a record high RM 917mil revenue and a record high RM 48.7mil profit after tax.

This year, the management seems confident and optimistic about their prospects, and there's good reason to believe they will try again to break that wall and stand a good chance at doing so this time.

As usual, this is just my own personal writing for knowledge and information sharing only. Please do your own further due research before making any investment decisions, and as usual execution risk is always there.

With that out of the way, let's just go through a few highlights in their near term (~ 1-2 years) prospects:

1) They have finally secured the first international order to supply precast concrete parts for 400 villas in Northern Jeddah. This is a good start and if they can execute this well, there should be ample market to tap into here.

2) They have an existing construction orderbook of RM 1.38bil to be progressively recognized over the next 2 years.

3) Their property development arm also has unbilled sales of RM 750m still yet to be recognized from their ongoing projects.

4) As usual, they continue to secure related party contracts from their parent company $LBS / 5789 (LBS BINA GROUP BERHAD), which I mentioned before is not necessarily a bad thing for the construction industry. If you read LBS' commentaries from their QR, you would know that LBS is aggressively planning new project launches across Selangor and Johor to the tune of close to RM 2.3bil in GDV. This bodes well for MGB as they stand a good chance to be selected for many of these construction projects.

5) Of course, MGB also secures projects from other parties including the Selangor Gov arm to build affordable housing, making good use of their precast capabilities. If you've gone to KLIA recently, you can actually see one of MGB's projects just recently completed along the way. With affordable housing still on top of the agenda for the Government, I believe more launches could also be on the way.

All in all, MGB has been walking the talk so far, and continue to also pay out increasing dividends alongside their improved performance. While I still remain cautious of their huge amount of goodwill in the books, operationally the company has been doing well and there's nothing to complain about.