Equity Research Note: Meta Bright Group Bhd (2097)

Date: March 13, 2025

Ticker: MBRIGHT (Bursa Malaysia)

Current Price: RM0.115 (-4.17% intraday)

Market Cap: RM291 million

Recommendation: Buy

Target Price: RM0.18 (56% upside)

Investment Thesis

Meta Bright Group Bhd (MBRIGHT), formerly Eastland Equity Bhd, is set to capitalize on Sabah’s infrastructure boom through its subsidiary, Expogaya Sdn Bhd, the state’s largest ready-mix concrete supplier. With Sabah’s construction sector fuelled by RM23.8 billion in federal infrastructure allocations (Budget 2025) and a growing pipeline of private developments, Expogaya’s operational scale, strategic investments, and sustainability focus position METABRIGHT as an undervalued growth play in Malaysia’s industrial materials space.

At RM0.115, MBG trades at a discount to its intrinsic value, supported by a robust RM800 million project pipeline and a planned RM20 million capacity expansion. We initiate coverage with a Buy rating and a 12-month target price of RM0.18.

Company Overview

Meta Bright Group, listed on Bursa Malaysia, operates across multiple sectors but derives significant revenue momentum from Expogaya, its wholly-owned subsidiary established in 2006. Expogaya dominates Sabah’s ready-mix concrete market, leveraging 16 batching plants and a fleet of 318 vehicles to deliver 7,200 cubic meters daily.

In FY2025, Expogaya contributed RM98.44 million to MBG’s topline, reflecting its growing importance to the group amid Sabah’s infrastructure-driven tailwinds.

Macro Tailwinds: Sabah’s Infrastructure Surge

Sabah’s construction sector is undergoing a transformative phase, underpinned by:

Budget 2025 Allocations: RM6.7 billion for rural development and RM9.7 billion for the Pan Borneo Highway, alongside RM7.4 billion for the Sabah-Sarawak Link Road (SSLR) Phase 2.

Private Sector Growth: Mixed-use projects like 88 Avenue in Kota Kinabalu (RM60 million Expogaya contract) signal rising urban demand.

These investments translate into an “insatiable” demand for ready-mix concrete, a critical input for highways, bridges, and urban developments. Expogaya’s entrenched position as Sabah’s leading supplier gives MBG a first-mover advantage in this high-growth market.

Operational Excellence and Growth Catalysts

Scale and Efficiency:

· 16 batching plants across Sabah ensure supply chain resilience despite logistical challenges.

· A 318-vehicle fleet (mixer trucks, dump trucks, concrete pumps) minimizes delays, enhancing client reliability.

· Daily capacity of 7,200 cubic meters, with a RM20 million investment from MBG slated to boost output within two years.

Revenue Momentum:

FY2025 contribution of RM98.44 million underscores Expogaya’s profitability.

Completed RM220 million in projects over the past two years, with an RM800 million pipeline over the next 3-4 years signalling sustained growth.

Sustainability Edge:

· Adoption of low-carbon concrete aligns with Malaysia’s green building standards, enhancing appeal to ESG-focused investors.

· Annual CAPEX of RM10 million ensures cutting-edge equipment and eco-friendly production.

Financial Snapshot

While full FY2025 financials are pending, Expogaya’s RM98.44 million revenue contribution suggests it accounts for a significant portion of MBRIGHT’s topline. At a market cap of RM291 million and a share price of RM0.115, MBRIGHT appears undervalued relative to its growth prospects. Assuming a conservative 10% net margin on Expogaya’s revenue and factoring in the broader group’s diversification, we estimate MBRIGHT’s forward P/E at ~8x, well below the Bursa Malaysia industrial sector average of 12-15x.

Valuation and Price Target

We value MBG using a discounted cash flow (DCF) model, projecting Expogaya’s cash flows from its RM800 million pipeline and capacity expansion. Key assumptions:

· Revenue CAGR of 15% over 2025-2028, driven by infrastructure spending.

· EBIT margin of 12%, reflecting operational leverage.

· WACC of 10%, conservative for a mid-cap industrial player.

· This yields a target price of RM0.18, implying a 56% upside. Upside risks include accelerated project awards, while downside risks include execution delays or commodity price volatility (e.g., cement costs).

Investment Risks

· Execution Risk: Delays in Sabah’s infrastructure projects could defer revenue recognition.

· Commodity Inflation: Rising input costs (e.g., cement, fuel) may pressure margins.

· Liquidity: Low trading volume may deter institutional interest.

Conclusion

Meta Bright Group offers a rare opportunity to invest in Sabah’s infrastructure boom via Expogaya, a market leader with operational scale, a strong project pipeline, and ESG credentials. At RM0.115, the stock is mispriced relative to its growth trajectory. We recommend Buy with a target of RM0.18, anticipating catalysts from capacity expansion and project execution over the next 12-18 months.

$EASTLND / 2097 (EASTLAND EQUITY BHD)