Mega First Corporation Berhad - Additional stake acquisition in Stenta Films
Fri, 23-Jan-2026 07:32 am
by Tan Sue Wen • Apex Research

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MFCB (3069)

Target Price (RM)

3.42

Recommendation

Hold

  • MFCB has proposed to acquire an additional 12.5% stake in its packaging subsidiary, Stenta Films (M) Sdn Bhd, for RM33.1m, increasing its effective interest from 75.0% to 87.5% and terminating the existing POA.

  • At RM1.283/share, the acquisition implies an equity valuation of c.RM265m for SFM, or an implied earnings multiple of c.16.2x based on annualised 9MFY25 packaging PBT of RM16.2m and a 24% tax rate. While this is above SCIENTX’s c.11x trailing P/E, we view the premium as acceptable given the recovery in packaging earnings, SFM’s higher exposure to paper-bag products with better margins, and the structural benefits from POA termination.

  • Earnings forecasts are raised by 1.3% for FY26F-FY27F, reflecting the higher effective stake. 

  • Maintain HOLD with an unchanged TP of RM3.42, based on SOP valuation.

 

Additional Stake in Stenta - Packaging Business. MFCB has announced a proposed additional investment in its subsidiary, Stenta Films (Malaysia) Sdn Bhd (SFM), alongside the termination of an existing put option agreement (POA) prior to its original expiry in July 2026. Under the proposal, MFCB will acquire 25.8m ordinary shares, representing 12.5% of SFM’s issued share capital, from the minority shareholders for a total consideration of RM33.1m, to be funded via internal funds. Following completion, MFCB’s effective interest in SFM will increase from 75.0% to 87.5%. The purchase consideration is based on an agreed exit price of RM1.283/share, with completion expected within 30 days of the SPA date.

 

Our View. We view the development positively, as it supports improved cash-flow contribution to group earnings via a higher economic interest in the packaging business. At RM1.283/share, the acquisition implies an equity valuation of approximately RM265m for Stenta Films (M) Sdn Bhd. Based on annualised 9MFY25 packaging PBT of RM16.2m and an assumed 24% tax rate (as a proxy for earnings capacity), this translates to an implied earnings multiple of c.16.2x, which is on the higher side compared with listed peer SCIENTX (NR), trading at around c.11x TTM P/E. The premium is considered acceptable, reflecting higher economic interest in a recovering, paper-bag-focused packaging business with stronger margins, alongside the structural benefit from POA termination. 

 

Earnings revision. We raise our earnings estimates by 1.3% for FY26F-FY27F, reflecting the higher effective stake in SFM (87.5% vs. 75.0% previously).

 

Valuation & Recommendation. After factoring in the effective stake increase, we maintain our HOLD recommendation with an unchanged TP of RM3.42, based on a SOP valuation and a three-star ESG rating. We favour MFCB for its (i) defensive earnings profile, with ~90% of PBT contributed by recurring income from the Renewable Energy segment, (ii) commitment to pursue value-accretive growth opportunities, and (iii) strong balance sheet and cash flow generation, underpinned by a low gearing level of 0.18x as at 3QFY25 and operating cash flow exceeding RM500m annually.

 

Risks. Appreciation of MYR against USD, increase in petcoke prices, and a slower-than-anticipated recovery in the packaging segment.

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