Mega First Corporation Berhad ($MFCB)

All right. Welcome, everyone, to Mega First's First Quarter 2026 Results Briefing. This is the first time that Mega First is hosting this on our own. But before I proceed, can I just check with the participants attendees, whether you can hear me clearly. Can somebody say yes?

Yes.

Okay. Good. All right. Thank you very much. All right. Today, I have on my right, [ Terry ] Neo. He's actually our Mega First CFO. And on my left is John Huo. He is working with our Renewable Energy division and both have kindly agreed to help moderate today's results briefing. Hopefully, logistically, you won't have any hiccups. If you do, please bear with us. I think like before, we will go along with similar format as what John and Rondy have been doing in the past many, many quarters. Unfortunately, because of personal commitments they are not able to post the analyst briefing or rather the results briefing. So what we're going to do is, again, whoever they got questions, please write down in the Q&A box. And [ Terry ] and John will kind of go through them and summarize these questions and ask these questions to me topic by topic in order to make it more organized. We will limit this briefing together with Q&A to about 2 hours or less, right? So without further ado, maybe I'll start with the presentation before we move on to Q&A. All right. For first quarter, our normalized revenue was down 5.5%, mainly because of a weaker renewable energy and also resources, which was partly offset by packaging. The normalized PBT was down slightly 1.8% to MYR 95.8 billion because of weaker resources, which were slightly offset by stronger contribution from [indiscernible] and Packaging. The normalized PATNCI is down about 4.7% to MYR 85.8 million, and the decline is mainly because of the maiden 5% corporate income tax rate on [ Don Sahing ] profits with effect from 1st January 2026. The reported PATNCI is broadly stable, down about 0.7% year-on-year. Moving to renewable energy. The normalized revenue was affected by unfavorable ForEx translation loss. The ringgit strengthened 10.9% against the U.S. dollar. Therefore, the revenue came off 3.9%, which was partly mitigated by high hydro energy volume. The generation was up 6.4% to 514 gigawatt hour and the EAF rose to 73.2% from 68.9% last year. This quarter also saw a slight increase in the tariff from USD 0.06 to USD 0.0605. Solar energy continues to grow, up 24% year-on-year. The normalized PBT was up 3.2% despite lower revenue, supported by lower net interest expense and lower O&M cost as well. This is a chart showing you the PA level, water level. And on the right is the EAF for the last 2 years and this year. I just want to point out that if you look at the EAF chart, it is lower than the blue line, which is 2024, and that is because of the -- I mean, the energization of the fifth turbine, which therefore lowers the average EAF for the entire five turbines. In terms of water level, this year's water level from January until today has been higher than the previous 2 years, as shown in the chart on the left. Resources division, revenue was down 33% because of weaker demand for line products, both domestically and the export market, plus an adverse export currency impact resulting from the strengthening ringgit versus the U.S. dollar. PBT was down at a sharper rate of almost 60% to MYR 3.9 million because of lower revenue and also higher operating costs in Malaysia. Packaging side, revenue was up 6.3% to MYR 108 million, resulting from expanded market reach on stronger marketing and new capacities. However, the PBT was -- sorry, this is -- the growth is actually in spite of industry headwinds because of overcapacity, higher raw material costs, weaker export currencies and also supply chain disruption. And because of the higher revenue plus higher plant utilization rate, PBT actually rose 66% to MYR 7.3 million. This is a snapshot of the key balance sheet items. There's nothing unusual. Receivable continues to come off a little bit. The long-term receivable continues to come down as EDL repays the [ medium-term ] loan from the restructuring of the long-term receivable. and payable is up because of dividend provision in the first quarter this year. On cash flow, MYR 168 million after-tax cash was generated from operating activities, of which MYR 48 million was deployed for investments, and that includes MYR 33.1 million for the additional 12.5% stake in Spar, MYR 10 million was distributed to stakeholders and MYR 124 million was retained in the group for future use. As you can see, the capital deployed continues to come down. In the first quarter, it was only MYR 48 million. The bulk of it is on packaging. That is literally the tail end of the expansion that we did 2 years ago. There is no new capacity expansion. And the RE side is continuation of CapEx on the Maldives and the CGPP solar farm in. Because of the strong cash flow, our net debt-to-equity ratio continues to improve to 12.3%, down from 15.9% in December last year. The net debt has also reduced to MYR 441 million. Some other updates. As mentioned earlier, the group got an additional 12.5% stake in [ Santa ] [indiscernible] bringing effective interest to 87.5%. Edenor has filed for judicial management. All right. Moving to prospects. We do foresee the -- I mean, the macroeconomic conditions have actually worsened in part due to the U.S.-Iran conflict that started in February and the closure of Strait Hormuz. These events have resulted in energy, commodity, plastic resin prices and freight rate spiking, therefore, increasing cost pressure across the entire supply chain and our manufacturing groups like other manufacturing operations are not spared. And if this situation prolongs, it may have a negative impact on our earnings. The [indiscernible] remains our [ top performer ], it's expected to remain resilient, supported by U.S. dollar-denominated income. Resources side will continue to face the kind of margin pressure that we saw in the first quarter. and packaging side is affected by the rising ring and fuel costs. So overall, the strategy for the group is to prioritize cash preservation to refocus our attention on strengthening the RE earnings and continuously rationalize our nonperforming noncore assets, including Edenor. The capital commitment as of 31st March has now dwindled to MYR 24 million, and this represents the tail end of our expansion and projects. So in the absence of new RE projects, very likely this number will remain low for the rest of the year. On prospects on RE division, we expect in U.S. dollar term earnings to be stable year-on-year for the full year. There are two large-scale solar plants that will be commissioned in the second quarter and third quarter, respectively. That will raise our total capacity to 422-megawatt peak. We expect stronger hydro output, and that should support second quarter -- second half 2026 growth in earnings. This year, we will overhaul two turbines, which is one more than the previous year. The key risk remain U.S. dollar exchange rate because of translation loss and gain. And again, as mentioned earlier, this year is the first year I will have to pay a 5% corporate income tax. We will continue to expand the portfolio. We have a few -- we are working on a few projects in Laos, Cambodia and also Malaysia. Hopefully, one or more will come to fruition. This is a summary of the RE portfolio. On the resources side, we expect continuing challenges even before the Middle East conflict because of weaker consumer demand, a softer U.S. dollar and also rising costs. And we are responding the challenges through cost optimization. We will expand our customer base beyond traditional markets. And with these efforts, we believe that the earnings will be satisfactory for 2026. We may not be back to the profit that we generated in 2024. But I think overall, 2026 will be satisfactory. Packaging side will continue to push for revenue growth because of the capacity that we have expanded over the last 2 years. So we do see revenue continue to decline. However, there are headwinds because of the cost side. We will try to pass on this cost to price increases. And we believe 2026 results will also be satisfactory, mainly because of the customer that we expect and efficiency improvement together with cost pass-through from the raising cost increases. All right. That's all I have. I will open to Q&A. [ Rondy ] you want to go first?

Sure. I think for the energy side, there were a couple of questions was raised. I think I will start off for the [ Director Hong ], one question was asked is that can the management quantify how much of the overhaul cost has been recognized for the first quarter 2026? And are there any remaining overhaul costs for the second, third or fourth quarter this year?

The overhaul cost will be expensed as and when they are accrued, and that started in December last year. So there was some. But I think in total, the turbine overhaul cost will probably be around USD 1.5 million to USD 2 million. So we are talking about USD 3 million to USD 4 million for the two turbines. And that will be spread out from December last year to first quarter this year and some in second quarter because the second turbine overhaul will only be completed towards the third or fourth week of June.

While we are on this topic, right, I think just now, you also mentioned about the 5% corporate tax. There was a question asked that when will this tax exemption period end and when it ends, do we foresee any tax increase? And this increase, what rate are we looking at?

The tax incentive has expired as of 2025, starting from 2026, there's a progressive increase in income tax rate. This is the first year since the expiry of the tax holiday. So starting with 5% next year will be 10% the following year, 15% after that 20% and level off at 24% in 2030, right? But just bear in mind that when you want to work out the amount of tax that we do have some tax due from the interest expense. So in the first quarter, the effective tax rate for Don Sahing is 3.5% of PBT -- of group PBT contribution.

Okay. Slowly, I'll move on to the energy sector as a whole. With this 64-megawatt project that we expected to complete this year, do we have any expected annual earnings or contributions for the PBT?

Yes, of course. These two projects on average is expected to generate an IRR of around 10%. So you can roughly work it out. I think the turnover is probably around MYR 21 million on an annualized basis and PBT margin, hopefully, we can generate around -- about 15%.

Okay. Lastly, for energy questions or part of the energy questions. With this increase of AI as well as [ data center ] is going to be stopped in Malaysia, Mega would look beyond the IP and look into maybe coal or LNG?

Unlikely, I think we will still try to stick to clean energy, which is primarily renewable energy. We are looking beyond Malaysia, as you know, including not just Laos, but also [ Sarawat ] and Cambodia as well. I don't think we will move into coal. Although coal I don't think coal will be appealing in Malaysia. I think more so on natural gas. So there are natural gas projects coming on stream in Malaysia, and there are new investors who are interested to invest in gas plant in Malaysia.

Okay. So in terms of RE, upon completion of CGPP, we are going to look for more RE projects for Malaysia, right?

Yes, we are. We are looking and exploring possibility of [ LSS and BES ] as well. We are also looking at other alternative storage system like the [indiscernible] storage system. It is something new in Malaysia, but it's widely adopted in many countries around the world, including China.

[indiscernible] that invest more into the opportunity arises?

We will not. We have already expressed our interest to invest in the -- I mean, of the hydropower projects in the RFP has been requested have been issued.

Maybe let me add one question in solar. Talking about this additional solar power capacity of 63 megawatts, how sales and profit to be expected?

I think I already answered it. I think the turn is around MYR 24 million and the PBT margin should be maybe around 12% to 15% maybe we move on to other divisions.

Okay. Let's move on to resources. I think there's no more question on Don Sahing. On resources, basically, what is the utilization rate for this quarter? And how is the average selling price metric ton moving on?

The average utilization right now is about 70%. Roughly, we are doing around 35,000 tons a month. We are hoping to at least stabilize it to around between 35,000 and 40,000 tons. We have lost some market share in some markets. Some due to price competition from competitors like in China, some due to increased logistic costs. However, we are exploring a few new markets or rather markets that have been there, but we are not strong yet. So we are hoping to develop these markets as well. And hopefully, that can counter the decline in sales volume for some of the traditional markets like Indonesia and India and also domestically as well. I think there's a shift in demand for Malaysia, partly because of the consolidation of the steel industry. The steel industry in Malaysia is consolidating. Many of them are being sold to the Mainland Chinese investors. And we don't know yet exactly how the Chinese investors will restructure their manufacturing role between China and Malaysia. There is a high chance that we may not consume as much quick lime as before during the traditional data center.

Because you mentioned about the quite a number of factors that affect the division. So due to logistics, the competition and actually in Q1, the profit was actually lower. So do you see any risk of the division actually turning loss going forward?

Unlikely. I think first quarter is exceptionally weak if you compare year-on-year because last year, there was actually a spillover from December 2024 sales, okay? So first quarter in 2025 was stronger than what it should have been, okay? So this is a more normalized quarter. And number two is during this first quarter, we did have a couple of major customers who are undergoing maintenance and also because of overstocking earlier, there's actually a slowdown in demand in this quarter. But we do expect the next 3 quarters to show some improvement from the first quarter.

We are getting quite a number of questions on normal. Maybe perhaps we can actually combine and summarize them. Meanwhile, we will touch a little bit on packaging. One question was raised is that could the management elaborate on the pricing power dynamics between the flexible packaging compared to stretch?

Stretch film is a commodity, right? What Mega do in flexible plastic packaging is mostly on consumer product packaging. And in this part of the world, currently more competition on conversion business, right, because there are a lot of smaller players. And there are a lot of very strong and powerful consumer product companies, for example, Nestle, Ajinomoto. So they have a certain bargaining power, okay? So when it comes to margin, converters in Malaysia tend to have lower margin than the commodity players or the more upstream film manufacturers. That's why [ Santa ] [indiscernible] margin is better than [ Hexach ] margin, for example.

Okay. ,[indiscernible] of yours, there were also a question asked, what are the utilization rate for both?

It's improving. It's improving. I think we are now on average across the packaging division about 70% of capacity.

Okay. And when it comes to paper packaging, we know that mostly actually driven demand by the Western country. Do you see any improvement in terms of demand and also trends going forward?

We are making inroads to more customers in the U.S. We are making inroads to more customers in Australia, and we are now trying to penetrate the Europe market as well, including the U.K. So we have recently attended an exhibition in the U.K., and we are working on more customers in that region as well.

Okay. So when it comes to that, that was a very good question as actually what are the contribution when it comes to paper packaging compared to the packaging?

I don't want to disclose that, right? But I would say plastic is more than paper, right? Plastic is more than paper. But bear in mind that plastic account for around 3 quarter of sales, around 3 quarters of sales in plastic and paper account for 1 quarter of sales. But in terms of margin, paper will be higher than plastic. They are both profitable.

In [indiscernible] [ India ], in your quarterly report, you did say that actually the cost of plastic material price actually increased. So do you think customers begin to shift from using plastic to paper?

No, because the plastic packaging that we use or we supply to cannot be replaced by paper packaging. right? And yes, the costs are going up, but the price increase is more staggered, right? Because the whole industry has some inventory. So although the raising costs have gone up by around 80%, it will not immediately shift the cost of goods sold until 2, 3 months down the road. So what players are doing is they are increasing prices as the weighted average inventory cost goes up, and we are trying to do that as well. So it will be a progressive increase in selling price over the next 2 to 3 months, unless there's a sharp correction in raising cost, which we doubt. So I think by July, August, the selling price will reflect today's raising costs. So there are more rounds of price increases to be expected in the market, and that will include our own selling prices as well.

For packaging, I believe [indiscernible] has questions [indiscernible].

Maybe before we move on to , there's one question actually on food security. Say that we noticed that the food security segment, including [ Cambodia coconut ] has not been highlighted in this quarter presentation. Any reason for it? And we also noticed that actually the group focus is actually shifting back to core business. So could management provide any update on the food security segment and outlook in Malaysia and Cambodia?

I will answer question 2 first, right? Yes, you're absolutely right. We are now pivoting back to focusing on RE. Our future capital deployment will be focusing on RE. And yes, resources will still be one of our core. It's a very cash-generative business. It's a business where there are not a lot of competition and there is captive market in the region. So we will continue to keep that. Packaging side, we will eventually spin it off once we build up to a certain base, but it's still considered as core for now. Other than that, food security has been reviewed, and we have decided not to pursue food security as one of our core divisions. So when it comes to -- we are looking at how to improve the performance of the Food Security division without committing too much capital in it, all right, meaning that it's no longer our primary focus, okay? Then moving to Cambodia, we are downsizing the farm operation, partly because we are not too happy with the yield curve, how it is developing and partly because of the Thai and Cambodia border dispute, which have actually made all trades between Cambodia and Thailand collapsed. And because the borders have been closed, the transport costs no longer make commercial sense. Although we will continue to look at marketing it in a much more favorable manner because there is an export market to Vietnam and China, which is easier for us in terms of logistics and market access, right? Anyway, the whole thing will be scaled down, and we are actually hoping to use the land for better use, which is possibly renewable energy as well, all right? That land is suitable based on our preliminary assessment, is actually suitable for wind farm. So we are exploring that path. We are now conducting feasibility studies on setting up wind farms in Cambodia, and the whole team is working very hard towards that as well. In Malaysia aside, We think that the management execution is below our expectation. And therefore, we are looking at -- we are asking the management of CSC to pick up speed and also to fine-tune the way they manage the greenhouse farm. And it's only after they manage to improve their costing, their technology and also their market reach will really allow them to expand. So in the meantime, it's really just on a holding position, if you like.

While we are on the topic of Meg's focus on the division, right? Could you also understand how is the hospital project? What's the status and how is it going?

The hospital project will continue for now. We were actually about to -- we have actually finalized the EPC contractor and was about to award after finalizing price when the Iran war hit. And because of the Iran war, the EPC contractor needed to review the entire cost structure. And because they need to review the cost structure, we needed to review the design and the plan as well to try to make it within the budget that we have budgeted. So that process is ongoing. Yes, delayed the construction has delayed because of the uncertainty on the material cost, and we hope that we can come to some form of conclusion within the next 3 months or so.

So either project will continue?

So far, no. I wish everyone is keen on. Shall we move on to [indiscernible].

Okay. This shareholder basically has already summarized for me. Okay. Mr. Yeow, actually, at the time of [ MSC ] investment in roughly 5 years ago, management was very optimistic citing the experience and capability of the [ COT ] team. Given that Ethanol is now under [ GM ], could you elaborate on where go wrong? And what were the main causes behind the whole?

All right. Maybe it's worthwhile to deepen our [indiscernible]. Right from day 1, we are only a passive shareholder, if you like, right? We didn't have -- I mean, when I say we, I say Mega First as a group, we didn't have portfolio experiences. We didn't know the business, to be honest. We were shown this deal by [indiscernible] and his team, and we felt that they know what they were talking about. They were willing to put money on the table, have the money on the table. And the entry cost was very low, right? You can remember, you can recall, I think we announced the investment, we only invested MYR 20 million each into[indiscernible]. So -- but what subsequently happened was we kind of relied on [indiscernible] and his team to try to turn around this plant. And in the process, many things were discovered. For example, they realized that the plant design is not very efficient. They realized that there are quite a number of bottlenecks. They also realized that the processes were not streamlined. And they also realized that there is quite a lot of leakages, and you like. And a lot of time in the past 3 years, they were focusing on upgrading the plant and also repairing the problems in the plant. So in total, they spent about cumulatively MYR 100-odd million, about MYR 105 million to MYR 106 million. And while they are doing that, the plant could not be run efficiently. And we have been told repeatedly that it's because they cannot run the plant efficiently, that's why there are so much losses, right? So we didn't really -- we did question them, but the answer has always been the plant problem. And therefore, if we can get the plant up and running and if the plant can run at an efficiency level of 90% and above, then should be able to make some money. But over the years, we also learned quite a fair bit about the industry. We understand the implication of the evolving [indiscernible] export tax policy of Indonesia. And we also understand the impact of the biodiesel mandate in Indonesia. So long and short of it is Indonesia has been raising the biodiesel mandate. And right now they are going to implement a [ B50 ], meaning that 50% of the biodiesel or 50% of the diesel must be biodiesel, okay? That percentage has been rising from 5% 10% to 15%, 20%, 25%, 30%, 35%, 40%. And more recently, they are going to introduce [ B50 ], which is 50%. But because of market feedback, they have decided to kind of stagger implementation of B50. But no matter what is it, okay? And because of that, it actually gives more and more unfair cost advantage to Indonesian players. And these Indonesian players, they enjoy low raw material cost because of the export tax on [ CPO ] in place. So in other words, if you are an Indonesian bumper, if I have to export my [ CPO ] or my [ CPKO ], I have got to pay to the Indonesian government huge export tax, correct? So the net that they collect is a lot lower after the tax. So instead of exporting it, they rather sell it cheaper than international prices to their own oil chemical companies. So the oil chemical players in Indonesia enjoy lower raw material feedstock price. And this feedstock can account for 70% of selling prices. So it's a very big impact. And then on the sales side, we also learned that in order to be successful, you need to have a global sales coverage. But having a global sales coverage means you need to have a sizable capacity, which we don't. So therefore, it's a chicken and egg issue. You cannot afford to build a global network. You can only focus on selling to Asian market. And Asian market, the prices can be very bad, not bad all the time, but definitely may be very bad, especially to China. And because of that, we felt that, I don't think we should -- I don't think this business can be on a stand-alone basis for the long term, all right? But in the short term, given the management's assessment to us, we were hoping that it can turn around. And then first quarter. When we look at first quarter results, we were very disappointed because the plant were actually quite efficient by the time we reach March and yet we were losing quite a fair bit of money. So we think that is because of other reasons. And therefore, sometime in late April, after the March results came up, we literally decided that we are not going to put in more money, right? And therefore, we suggested that if we don't put money, we are not going to survive given the recurrent losses. And therefore, Board of Edenor decided that the best cost action is to apply for [indiscernible] so that it allows time to consider selling the business to the plant or the company [indiscernible]. That's how we ended up in this situation. We have to do it because we have got to cut loss at some point. And this is the time that we decided to cut loss. So once we cut the loss at least the yearly share of loss, I think last year was about MYR 70 million, MYR 60 million, right? This year, if we do stop it, if you look at first quarter, if you extrapolate it, it's going to be MYR 200 million loss. So our share will be MYR 100 million loss again. And it's a question of time that we have to put the stock. So we decided we can defer and stock. Yes, there may be some financial impact depending on what the how the judicial manager address the issue and whether there's any prospective buyers that we can strike a deal. Just bear in mind that this company is a shareholder company. It's just that if we don't put -- if shareholders don't put in new money, they may have liquidity issues, all right? So instead of waiting for that to happen, we said it's best that you get a judicial manager in first. If not, there will be a liquidation issue.

While we are on this topic of the shareholder ask is that are there any expected time line for this [ GM ].

[ GM ] normally, they will see the 6-month moratorium period. But we hope that we don't need the 6-month period before we decide what to do with the plant, right? And we hope to settle within the next months.

I think you already explained the financial impact question on can you guide us actually what will be the maximum exposure? And because they have noted that there's a [indiscernible] of about MYR 400 million, will this be a [indiscernible].

Yes. Okay. If you look at the balance sheet, just a quick snapshot of the balance sheet. We have about MYR 210 million to MYR 220 million in net working capital, meaning your inventory plus your receivable less of your trade payable. We have about MYR 210 million, MYR 220 million. And we have a building that the book value is about around [indiscernible] MYR 30 million. Then we have a debt. I think right now, it's somewhere around MYR 420 million to MYR 430 million, okay, in total. So if you net of some cash, then we are talking about maybe around MYR 410 million or so. So the first step that we will do or we think the [ GM ] will do is look for a buyer, right? We'll look for a buyer. There are interested parties, all right? So the GM will negotiate with the buyers. And depending on how the buyers value the factory and the land. The land is on 34 acres of industrial land. So it's worth some money plus the building on top and also the plant on top. So if we sell the plant and building at a fair value that we think is fair, then the impact to Mega First Group will not be very significant. But I cannot tell you how much exactly the impact. But based on our internal estimate, we believe either way profit or loss will not be material.

So actually in your books, I mean, in [ MSV ] books in 2025, the investment -- the carrying amount is about MYR 100 million. So is [ MSCE ] planning to fully impair the investment in the next quarter?

Well, it depends on what transpired between the GM and the prospective buyers. If they manage to sell at book value, then no. If they sell it above book value, there is a gain, right? If they sell it below book value, then there's a loss. So it's -- I mean, the long and short of it boils down to that, okay? So what -- how much are buyers willing to pay? We don't know. We have no idea, okay? But if we sell it then if somebody is willing to pay book value, then there's no loss or profit. Anyway, the MYR 102 million book value as of 31st December has reduced further because of the MYR 25 million loss that we -- our share of loss in the first quarter. So the book value on our side would have been reduced to around MYR 75 million as of March 31. We will definitely update the community, investment community the moment that we have an idea how much the plan we think is worth. And hopefully, once the GM comes in, we are still waiting for the court hearing. Once the GM comes in, they will immediately take over the discussion with prospective buyers.

So there was a question raised what happened is that the counterparty to offer a very, very low price. Could [indiscernible] still reject the deal or how the deal?

Well, we have to weigh our options, right? If there's no option, then there's no option, even though they offer a relatively low price, even if they offer a discount to the asset book value, we will have to consider what are our options. And at this point in time, it's not convenient to say what are these options. But yes, if nobody wants to buy it and only one guy wants to buy it and he's not willing to pay the full value of -- he's not willing to pay the full book value, we may have to consider seriously as well because the worst-case scenario, this liquidation.

Okay. I think that pretty much of all the questions raised on ethanol. One of the shareholders raised a question regarding [ RE ]. I'm not sure whether Mr. could answer this. But the question raised was they understand that the company is actually focusing on RE. They would like to further know why the company decided to stick with green energy, but not any other energy?

I mean the whole idea of us why we gave up plant. Why we gave up [indiscernible] in China. We did have a coal-fired power plant there or coal-fired [ cheap ] plant supplying steam to the textile industry in [indiscernible]. [indiscernible] is one of the world's largest producer of textile and [indiscernible]. And we also had a medium fuel oil power plant in Saba. We have decided to give up, although there was a chance for us to expand it so that we can focus on renewable energy, which is what we think should be the way forward, right? And there are plenty of opportunities. So if anything, it must be at least relatively clean. So coal [indiscernible]. If anything, I think I guess in Malaysia is a very costly game to make.

And a tricky question on this is also that what are the expectation for the future project return?

If you do in Malaysia, if you do LSS, the IRR will be very low. I think based on the last few rounds of results, we project IRR to be as low as between 5% and 7%. And if it is 5% and 7%, it is in between, we are definitely not interested. So we will be disciplined in terms of how much to tender. I think for us, if the project IRR is not closer to 9%, we would rather miss the opportunity. But that is in Malaysia. But we are talking about Laos and Cambodia based on recent projects that people do, not ours yet, the project IRR, we can still hit around 13%, 14% to 15%, okay? So we will rather do those hopefully, it will not be as competitive as [ LSS ] in Malaysia. But we definitely have a certain requirement of return, and we will not do if it is 5% to 7%.

And I would say for the foreign projects, we mostly will derive income from U.S. dollar rather than local currency.

Yes. If it is now, it will still be U.S. dollar. If it is in Cambodia, I think it will still be in U.S. dollar unless you do something in Thai, then Thai baht. I don't think anybody wants to sell for Vietnam dong. So it looks like it's still going to be U.S.

Today has been a quiet Q&A was asked other than -- I don't know[indiscernible].

Maybe you have this question overall question. So you see that looking at the company plan to rationalize and other noncore and together with to secure any major RE project over the past few years, it appears that the company is actually running out of revenue growth. Not too sure what question...

I think we have -- okay, yes, we have not managed to secure big projects since the [ Mali ] project and also the CGPP project. I mean that's partly because of our financial discipline, all right? But we are stepping up efforts to secure new projects. And hopefully, the situation will change. Now assuming that we do not get any projects, I think the Chairman has mentioned this before is -- if there's nothing to spend on then we will probably return more money to shareholders either via dividend -- special dividend payment or via share buyback. I think in the AGM, I did mention that despite this difficult period, we will continue to step up a little bit of our dividend. And for 2026, it won't be less than MYR 0.10. Last year was MYR 0.975. Just to assure investors that we will continue to pay dividends, and we will consider special dividend if there is really no project and our cash power has grown. Today, we don't have -- technically, we don't have a huge cash power, all right? And when I say cash power, I know this question was asked many -- some time ago, I think at least 2 years ago, MYR 500 million is a lot of cash. In the RE world, MYR 500 million is nothing, okay? So assuming we do the wind project, for example, we are talking about MYR 1 billion project, all right? If you do [ Sara ], it will be maybe $2 billion project, right? We do another hydropower in Laos, not even the size of [ Downtown ], it will still be at least MYR 1 billion to MYR 2 billion project, although the size could be much smaller. So the cost of investment has gone up quite substantially since our [ Downtown ] business. Downtown, we only managed to construct at USD 1.4 million per megawatt capacity, okay? Now that figure has balloon to at least USD 2.5 million per megawatt hour. So you can imagine if I do a hydropower of 200 megawatts, that is 20x 2.5, that's USD 5 million more than that [Audio Gap] So the numbers that we are talking about is got to be in the [indiscernible].

Since we talk about the cash looks big, more for RE. And when our stock price actually dropped to [ 20 ], why MS did not do any share buyback.

I mean our -- as far as I understand, our share buyback is not meant to influence the share price that much. Our share buyback is more like, oh, we think it's cheap enough, we just maple. It's not meant to influence the share price, all right? If there's too much heavy selling pressure, you really it will just allow you to drop rather than defending it for the sake of defending income, okay? But it will come back, right? We believe that once the [indiscernible] issue is resolved satisfactorily, it will remove this huge element of uncertainty in terms of how much profit we're going to make, okay? If you strip out -- basically, what we are trying to say is you can virtually revert back to the normalized numbers that we have been showing every quarter. So we are talking about no less than MYR 400 million profit after tax after minority.

We'll take another two questions before we close. Yes, sure. I think the last question that I want to cover is actually from the shareholder, what level of cash reserve does the group consider sufficient before proceeding to the next project?

I can't commit to a number. I don't think the Board is willing to commit to a number now because we do assess the probability of projects materializing. So we are working on, let's say, five projects right now intensively. In our mind, we actually do have a certain probability of getting it, okay? So we have got to prepare for all this. So if there is no probability, then maybe you build up to a cash of MYR 1 billion, maybe it's enough, I don't know. But if we do have a few projects coming on stream, then we have got to prepare for that. All right. Thank you, everyone. I hope this was -- I think this was a relatively smooth session. No major hiccup on the logistics side. And thank you, everyone, for your time.

Thank you very much.

Thank you. I'll see you in the next results briefing. Thank you.