ATECH’s 2 for 1 bonus share issue and 1 for 1 free warrant issue exercise have been completed, with the warrants listed yesterday. We view this corporate exercise positively as it enhances trading liquidity, although potential dilution from the warrants has yet to be factored in due to the current discount to the exercise price.
Orderbook remains strong at c.RM500m, anchored by its largest communication customer. Customer F’s production is robust (7 SMT lines at 80–85% utilisation), and P5 plant ramp-up for automotive is progressing, supporting growth into 2H 2025.
Reiterate BUY with unchanged TP of RM1.39, post-bonus adjustment (25.0x FY25F EPS of 5.5 sen). Fully diluted TP would be RM1.26. Earnings growth outlook supported by resilient volume loading and defensive industrial-centric portfolio.
Bonus shares & warrant listing. ATECH’s 2 for 1 bonus issue of shares and 1 for 1 bonus issue of free warrants were recently completed, with the warrants officially listed yesterday. The warrants carry an exercise price of RM1.16 and a five-year tenure, expiring in June 2030. We view this corporate exercise positively as it is expected to enhance trading liquidity and may attract greater institutional interest, particularly among investors seeking entry points into high-growth technology names with improved float.
Valuation adjustments. Our valuation has been updated to reflect the enlarged share base of 1.3bn shares following the bonus issue. However, we excluded the potential dilution from the bonus warrants at this stage, as we do not anticipate any immediate conversion given that the current share price remains below the exercise price (implying a premium of RM0.36). We will revisit a fully diluted valuation should warrant conversion becomes likely or materially impacts earnings. As such, our target price remains unchanged at RM1.39. For reference, should we account for full dilution, the adjusted target price would be RM1.26.
Volume loading remains resilient. Operationally, ATECH continues to maintain high utilisation across its key plants, with P1–P3 running at 85–90% capacity. The newly commissioned P5 facility is currently operating at 20% utilisation and is expected to ramp up further in 2H 2025, in line with increased production of automotive-related products. We remain confident that Atech will secure additional automotive customers to capitalize on the available capacity at P5.
Orderbook. ATECH’s order book remains healthy at c.RM500m, based on a USD/MYR exchange rate of 4.25. Over 50% of this is anchored by its largest communication customer, which continues to benefit from sustained global investments in secure communication infrastructure by government agencies and enterprises. Importantly, the reported order book excludes contributions from Customer F (semiconductor) and POS machine customers. Customer F’s production remains strong, with all 7 SMT lines operating at 80–85% utilisation, indicating continued demand momentum.
Outlook. Outlook remains positive, supported by resilient customer loading patterns and strong retention across its diversified MNC customer base. Its industrial-centric portfolio adds a layer of defensiveness, making it less vulnerable to short-term cyclical fluctuations. Looking ahead, we are optimistic that earnings growth in FY25F and FY26F will be driven by the ramp up of the automotive segment and the strong recovery in utilization across Customer F’s production lines.
Valuation. We reiterate our BUY recommendation on ATECH with a target price of RM1.39 post-bonus share issue, based on a valuation of 25.0x FY25F adjusted EPS of 5.5 sen. This valuation excludes any ESG premium or discount, in line with the company’s current three-star ESG rating.
Risks. Lingering uncertainties related to Trump-era tariffs and a stronger MYR against the USD, which may weigh on earnings.
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Currency | Buy Rates (RM) | Sell Rates (RM) |
---|---|---|
USD | 4.219747 | 4.253423 |
EUR | 4.911876 | 4.916990 |
CNY | 0.590266 | 0.590912 |
HKD | 0.537648 | 0.541618 |
SGD | 3.296584 | 3.319916 |