DBSVS Sees Less Impact from Myanmar Crisis on MEGA, Recomm. “BUY” with a TP of ฿45

As over 73% of Mega Lifesciences Public Company Limited (MEGA)’s total revenue is contributed by the business overseas especially in Myanmar, investors have expressed their concerns about the uncertain political crisis in Myanmar could directly affect MEGA’s operations.      

 

However, the research conducted by DBS Vickers Securities (DBSVS) found that the ongoing political conflict in Myanmar causes insignificant impact on MEGA’s earnings outlook. At present, Myanmar contributed 40-44% of total revenue, meanwhile EBITDA decreased to 25-26%.    

 

MEGA targeted to double its revenue in 2025-26 compared to a revenue in 2019 due to a higher global demand in nutraceutical products driven by rise in the aging population, and  nutraceutical also has physiological benefits or provides protection against any disease.

 

DBSVS reiterated a “BUY” recommendation on MEGA, but trimmed a target price from ฿47.00/share to ฿45.00/share after revised down terminal growth to 2.5% from 3.0% to reflect a risk from Myanmar-based business. With DCF method, net profit growth in 2021-22 is expected at 4.8% and 9.8%, respectively, meanwhile dividend yield would stand at 2.8%.