Aurelius Technologies Berhad - 1QFY25: In line with resilient loading
Tue, 03-Jun-2025 07:30 am
by Jayden Tan • Apex Research

Counter

ATECH (5302)

Target Price (RM)

4.17

Recommendation

Buy

  • 1QFY25 CNP of RM16.1m came within expectations, accounting for 22% of our full-year forecast, with seasonally weaker performance in 1Q. YoY, CNP rose 2.3%, supported by stronger volume loading; QoQ, profit remained flattish despite a 7.9% revenue drop, aided by forex gains and reduced refund liabilities.

  • Maintain FY25F/FY26F forecasts, supported by robust order book of RM494.6m and demand resilience from industrial clients.

  • Reiterate BUY with unchanged TP of RM4.17, based on 25x FY25F EPS of 16.7 sen; TP to be revised post ex-date of the bonus issue.

 

Results within expectations. 1Q25 CNP stood at RM16.1m, in line with our expectations, accounting for 22% of our full-year forecast, with seasonally weaker Q1 performance.

 

YoY. CNP rose 2.3% yoy, mainly supported by higher volume loading from customers, particularly its largest communication customer. Revenue grew 17.6% yoy, though GP margin declined by 0.8ppts due to an unfavourable USD/MYR forex translation, higher labour costs, and a 25% hike in electricity tariffs.

 

QoQ. CNP was flattish qoq despite the seasonally weaker Q1 and a 7.9% drop in revenue, thanks to a slight improvement in USD/MYR and a reduction in refund liabilities compared to the previous quarter.

 

Dividend. A first interim dividend of 3.6 sen/share was declared, payable on 15 July 2025.

 

Bonus issue. ATECH has fixed the terms for its previously proposed bonus issue, entailing 2 bonus shares for every 1 existing share and 1 free warrant for every 1 existing share, with an exercise price of RM1.16 per warrant. This represents a 5.44% premium to the theoretical ex-bonus price (TEBP) based on the current market price. We view this corporate exercise positively as it is expected to enhance trading liquidity and potentially attract greater institutional participation. Our TP will be adjusted post ex-date to reflect the enlarged share base.

 

Outlook. While ongoing geopolitical tensions have sparked concerns over supply chain relocation and demand visibility, we believe any meaningful shift remains unlikely due to the prohibitive costs involved. Nonetheless, we remain positive on ATECH’s demand outlook, underpinned by resilient customer volume loading, which reflects sustained demand and strong customer stickiness, particularly from its industrial-centric clientele that is less exposed to short-term disruptions. This is further supported by a robust order book of RM494.6m (vs RM437m in the previous quarter), indicating solid near-term earnings visibility. Meanwhile, the ramp-up of the P5 plant in 2H25, targeting high-growth verticals such as IoT, AI, and automotive, offers promising long-term structural growth potential.

 

Earnings Revision. No changes to our FY25F and FY26F earnings forecasts as results came within expectations and are backed by a resilient order book.

 

Valuation. Reiterate BUY with an unchanged TP of RM4.17, based on 25.0x FY25F EPS of 16.7 sen, with a 0% ESG premium/discount reflecting its three-star ESG rating.

 

Risks. Lingering uncertainties related to Trump-era tariffs.

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Market Mover
Settlement Rates
Currency Buy Rates (RM) Sell Rates (RM)
USD 4.210973 4.249411
EUR 4.954495 4.965490
CNY 0.589445 0.590817
HKD 0.536642 0.541158
SGD 3.306006 3.333319