MEGA Reports Record High Earnings in 2Q21

Mega Lifesciences Public Company Limited (MEGA) reported net profit of THB 503 million in 2Q21 which is up by 67.3% year-on-year and THB 835 million in 1H21 up by 34.4% year-on-year. According to Kasikorn Securities, MEGA beat the broker’s estimate by 37% and market consensus by 53% which is supported by strong sales from its business segments Mega WeCare, MaxxCare Distribution and OEM business, higher margin and FX gain of THB 35 million.

MaxxCare Distribution sales saw an upside of 38% year-on-year but remained flat quarter-on-quarter. While OEM business grew 40% year-on-year while saw growth of 84% quarter-on-quarter.

The management also declared an interim dividend (1H21) of THB 0.52 per share which implies a dividend yield of 1.3% at the current stock price. The ex-dividend (XD) date is August 27 and payment date is September 24.

The stock closed at THB 43.75 (+3.75) while Kasikorn Securities recommends “outperform” status with a target price of THB 47.00, with an upside of 17.50%. The investment thesis is based on strong demand for over-the-counter medicines due to higher consciousness about health amid COVID. Although downside risk remains for distribution business in Myanmar due to political instability. However, the management reported usual operations of its logistics. New products line traditional herbal medicines including hemp based products are expected to be introduced in the future which would further expand its market opportunity.