Aurelius Technologies Berhad - Performance within expectations
Fri, 30-Aug-2024 07:04 am
by Jayden Tan • Apex Research

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ATECH (5302)

Target Price (RM)

3.83

Recommendation

Buy

Summary

ATECH reported a core net profit of RM16.0m for 2QFY24 (+1.9% qoq, +52.0% yoy) and RM31.8m for 1HFY24 (+70.7% yoy), which came in line with our expectations and accounting for 52.9% and 52.0% of ours and consensus full-year earnings forecast.

We have revised our FY24 earnings forecast downward by -5% in FY24F to RM57.5m to reflect the weakening USD/MYR rate, which is expected to impact 2HFY24 performance. However, we maintain our FY25 forecast at RM72.2m and introduce a new FY26 forecast with core net profit of RM79.3m.

We maintain our BUY recommendation with an unchanged target price of RM3.83, based on a unchanged 23x PE multiple on FY25 EPS.

 

Results Review

  • Results review. In 2QFY24, the net profit reached a record high of RM16.0m, growing +52.0% yoy and +1.9% qoq. This strong performance was primarily driven by sustained revenue growth from the monetisation of the order book. Revenue for the quarter increased +39.6% yoy and +21.1% qoq to RM152.3m.

  • Within expectations. 1HFY24 CNP of RM31.8m came within expectations, accounting for 52.9% and 52.0% of ours and consensus full-year forecasted of RM60.1m and RM62.0m respectively.

  • Operations Highlights. The Communication Products segment revenue remained robust, growing +29% qoq and +36% yoy. The Electronic Device segment declined -10% qoq but increased +78% yoy, while the Semiconductor Components segment grew +24% qoq and +16% yoy. The Group's GP margin and PAT margin inched lower, due to an unfavorable product mix and negative forex impact in 2QFY24. Current order book fell to RM489.0m, from RM564.0m last quarter, primarily due to depreciation in value from the weakening USD/MYR. However, we remain optimistic about the order book's replenishment, as customer destocking has bottomed out, and existing customers are acquiring new products.

  • Industry Highlights. Despite the ongoing headwinds from global economic uncertainties and the weakening of USD/MYR, the trend of supply chain diversification and relocation away from China continues to benefit local players, including ATECH.

  • Outlook. We remain positive on the Group’s growth momentum, driven by a sustainably strong order book from long-term customers and the onboarding of new customers and products. Looking ahead to FY25F, we anticipate stronger growth with the completion of the P5 capacity expansion by 4QFY24, alongside ramped-up production for new customers and products.

  • Valuation. We have adjusted our FY24F earnings forecast downward by -5% to factor in the weakening USD/MYR, which is anticipated to mildly impact our 2HFY24 forecast. However, we maintain our FY25F forecast at RM72.2m and introduce a FY26F forecast with core net profit of RM79.3m, reflecting a +9.9% yoy growth. Growth will be supported by forex stability, with clearer global central bank monetary policy, and leveraging onto global supply chain diversification. We maintained our BUY recommendation with an unchanged target price of RM3.83 based on unchanged P/E multiple of 23.0x to FY25F EPS of 16.7 sen.

  • Risk. Prolonged weakening of the USD/MYR exchange rate will negatively affect our earnings forecast.

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Opinions, estimates and projections in this report constitute the current judgment of the author. They do not necessarily reflect the opinion of Apex Securities Berhad and are subject to change without notice. Apex Securities Berhad has no obligation to update, modify or amend this report or to otherwise notify a reader thereof in the event that any matter stated herein, or any opinion, projection, forecast or estimate set forth herein, changes or subsequently becomes inaccurate.

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Market Mover
Settlement Rates
Currency Buy Rates (RM) Sell Rates (RM)
USD 4.283853 4.317705
EUR 4.765844 4.774924
CNY 0.605865 0.606556
HKD 0.549396 0.553768
SGD 3.299365 3.325824