AME Elite Consortium Bhd - Within Expectations
Fri, 28-Feb-2025 07:29 am
by Kenneth Leong • Apex Research

Counter

AME (5293)

Target Price (RM)

1.920

Recommendation

Buy

Summary

  • AME’s 3QFY25 core net profit of RM18.4m jumped 109.2% yoy after excluding a fair value gain from the sale of industrial properties to AMEREIT in the previous corresponding quarter, but fell -17.9% qoq, bringing 9MFY25 core net profit to RM55.5m, which is within our expectations, accounting to 74.4% of our full-year core net profit forecast at RM74.6m, but was only at 32.3% of consensus forecasted core net profit of RM172.0m.

  • Future earnings growth is expected to emanate from progressive recognition of new property sales to RM430.2m as well as contribution from the newly launched 175.6-ac Northern TechValley @ Butterworth-Kulim Expressway (BKE) from 4QFY25 onwards.

  • We re-iterate our BUY recommendation on AME with unchanged TP of RM1.92, based on SOP valuations and ascribed with three-star ESG rating.

 

Within expectations. AME 9MFY25 core net profit at RM55.5m (+3.0% yoy) came within our expectations, accounting to 74.4% of our full-year core net profit forecast at RM74.6m, but was only at 32.3% of consensus forecasted core net profit of RM172.0m.

 

YoY. 3QFY25 core net profit jumped +109.2% yoy after stripping off fair value gain on investment properties amounted to RM13.2m in 3QFY24. Revenue for the quarter, however, declined -7.3% yoy to RM163.4m. 

 

QoQ. Core net profit decreased by -17.9% qoq as billing for certain property projects has yet to pick up pace. 

 

Outlook. Earnings growth is expected to emanate from the progressive recognition of strong new property sales which recorded at RM71.1m during the quarter, bringing cumulative 9MFY25 new property sales to RM430.2m – largely on track to meet management guidance of RM550.0m. We gathered that the newly launched 175.6-ac Northern TechValley @ Butterworth-Kulim Expressway (BKE) is expected to generate in new sales from 4QFY25 onwards. 

 

Earnings Revision. No changes, given that reported results came in-line with in-house forecast. We also introduced FY27F core net profit at RM92.8m.

 

Valuation & Recommendation. Re-iterate our BUY recommendation on AME, unchanged target price of RM1.92 based on SOP valuations and ascribed with three-star ESG rating. We continue to favour AME as a (i) proxy to rising FDI with Malaysia likely to stand as one of the beneficiaries on supply chain diversifications and (ii) backed by decent unbilled sales of RM480.0m (up from RM459.5m as at end-2QFY25) and outstanding construction & engineering orderbook of RM164.7m (up from RM148.2m as at end-2QFY25) that will provide earnings visibility over the next 18 months.

 

Risk. Labour shortages, insufficient industrial land, and unexpected further rise in construction cost.

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