Mega Lifesciences (MEGA) Q2 2024 earnings summary

Executive summary

• Revenue for 1H24 was THB 7.7 billion, nearly flat year-over-year, with branded business (Mega We Care) growing 2.5% YoY and distribution (Maxxcare) declining, mainly due to Myanmar consumer segment weakness.

• Net profit for 1H24 was THB 991 million, up slightly YoY, with adjusted net profit down 11% YoY due to forex losses in Nigeria.

• Gross profit margins improved to 47.7% in 1H24, driven by favorable segment mix and stable branded business margins.

• Board approved an interim dividend of 80 satang per share, representing 70.4% of reported net profits.

• Total comprehensive income for 1H24 reached THB 1,190 million, up from THB 1,060 million YoY.

Financial highlights

• 1H24 revenue: THB 7.7 billion (flat YoY); 2Q24 revenue: THB 3.95 billion (flat YoY).

• 1H24 reported net profit: THB 991 million (flat YoY); adjusted net profit: THB 1.051 billion, down 11% YoY due to forex losses.

• Gross profit margin: 47.7% in 1H24 (vs. 44.7% in 1H23); branded business margin stable at 65.2%, distribution margin at 25%.

• SG&A expenses: 28.7% of revenue in 1H24 (vs. 26.8% in 1H23); expected to normalize by year-end.

• Operating cash flow: THB 1.6 billion in 1H24 (162% of net profit).

Outlook and guidance

• Branded business expected to grow 5-6% in 2024, with potential for 8-10% growth in 2025, excluding COVID-related products.

• Target to double 2019 net profit by 2025, supported by a healthy product pipeline and expansion in Indonesia.

• New product launches (38 in 2024, 67 from 2022-2024) expected to contribute 2-3% to growth.

• SG&A as a percentage of revenue projected to normalize to around 27% for the full year.

• Growth in underpenetrated markets in Southeast Asia and Sub-Saharan Africa remains a key focus.