Aurelius Technologies Berhad - Solid showing
Tue, 02-Sep-2025 07:56 am
by Research Team • Apex Research

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ATECH (5302)

Target Price (RM)

1.27

Recommendation

Buy

  • ATECH recorded 2QFY25 core earnings of RM20.2m (+32% QoQ, +22% YoY), bringing 1HFY25 core bottom line to RM35.5m (+20% YoY). The results were inline with our (49%) and street (49%) expectations.

  • 2Q25/1H25 core net profit escalated +22% YoY/+20% YTD mainly due to stronger revenue contribution from Communication and IoT products (+10% YoY/+19% YTD; increased order allocation from its key communication customer) as well as improved core net margin.

  • Maintain BUY rating with a lower TP of RM1.27 (from RM1.39), based on 20x (from 25x) on rolled over FY26F EPS of 6.3 sen.

 

Results inline. ATECH recorded 2QFY25 core earnings of RM20.2m (+32% QoQ, +22% YoY), bringing 1HFY25 core bottom line to RM35.5m (+20% YoY). The results were inline with our (49%) and street (49%) expectations.

 

QoQ. Revenue rose 10% thanks to stronger sales in Communication & IoT segment (+9%; higher volume loading from its main communication customer and automotive clients) and Electronic Devices (+25%; likely due to incremental order from newly onboarded fintech customer). However, core earnings grew at a faster clip (+32%) attributed to gross margin expansion (+0.8%-pts) resulting from better economies of scale and product mix.

 

YoY/YTD. Core net profit escalated (+22% YoY/+20% YTD) mainly due to stronger revenue contribution from Communication and IoT products (+10% YoY/+19% YTD; increased order allocation from its key communication customer, partially owing to market share gains) as well as improved core net margin (+1.52%-pts YoY/+0.8%-pts YTD; aided by better economies of scale and cost optimisation efforts). 

 

Dividend. Declared second interim dividend of 0.85 sen per share (ex-date: 23 Sep) (none in 2QFY24), bringing 1HFY25 DPS declared to 2.05 sen per share (after adjusting for two-for-one bonus issue).

 

Outlook. Despite the prevailing forex headwinds stemmed from appreciation of RM against USD, we expect the impact to be cushioned by stronger loading volume from its key US-based communication customer, supported by steady rise in demand for mission-critical communication devices from the US as well as increased order allocation to ATECH from the client. Additionally, we expect continued positive momentum for Customer F (semiconductor component) due to planned expansion in new customer-consigned production lines. We note that ATECH is the sole contract manufacturer for Customer F outside of China, positioning the group as a beneficiary of the customer’s supply chain diversification strategy. The group’s orderbook stood at RM436m as at mid-August versus RM495m as at mid-May 2025. 

 

Earnings Revision. With the change of analyst, we have revamped our financial model and revised our FY25/26 forecasts to RM73.8m/RM82.1m, representing a slight adjustment of +2.3%/+3.8%, respectively against our previous projections. Also, we introduce the FY27F earnings at RM90.2m.

 

Valuation. Post earnings adjustments, we maintain BUY rating but with a lower TP of RM1.27 (from RM1.39), based on 20x (from 25x) on rolled over FY26F EPS of 6.3 sen, with a 0% ESG premium/discount reflecting its three-star ESG rating. Our ascribed 20x PE valuation is in line with its 2-year historical mean and implies a c.20% premium to an average 16.5x forward PE among Bursa-listed EMS peers. We like ATECH as an industrial-centric EMS provider with resilient earnings profile, backed by stable demand growth from its key customer and production ramp for its new semiconductor client. 

 

Risk. Prolonged USD weakness against RM and delays in production ramp for Customer F.

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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
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Currency Buy Rates (RM) Sell Rates (RM)
USD 4.213466 4.244897
EUR 4.946298 4.953651
CNY 0.592866 0.593738
HKD 0.540491 0.544550
SGD 3.282193 3.306905