Excluding exceptional items, AGX reported 1QFY26 core net profit (CNP) of RM5.1m (-10.4% YoY; +65.4% QoQ). We deem the results to be in line with expectations, accounting for 23.6% of ours and 19.0% of consensus full-year estimates.
We remain positive on AGX’s near-term prospects, supported by healthy freight demand, ongoing regional expansion and improving trade flows across the Asia-Pacific region.
Contributions from associate company are expected to improve, supported by the absence of one-off IPO-related expenses and continued growth in regional e-commerce activity.
Maintain our BUY call with a higher TP of RM0.69 (from RM0.62), based on 12.2x PE multiple applied to rolled forward FY27F EPS of 5.6 sen, supported by a three-star ESG rating.
Results Met Expectations. Excluding exceptional items totalling RM1.4m, comprising losses on disposal of a subsidiary, corporate exercise expenses and foreign exchange losses, AGX reported 1QFY26 core net profit (CNP) of RM5.1m (-10.4% YoY; +65.4% QoQ). We deem the results to be broadly in line with expectations, accounting for 23.6% of our full-year forecast and 19.0% of consensus estimates. Notably, 1Q is typically a seasonally softer quarter for the Group due to post year-end peak season normalisation and Lunar New Year-related disruptions, given AGX’s meaningful exposure to intra-Asia trade flows.
YoY. Despite revenue increasing +34.4%, CNP declined -10.4%, primarily due to a significant contraction in associate contributions, which fell -70.6%. The weaker associate performance was attributable to slower e-commerce activity, alongside elevated base effects arising from front-loading activities for US-bound shipments in the corresponding quarter last year. Nevertheless, the earnings decline was partially mitigated by broad-based revenue growth across all operating segments, driven by higher shipment volumes, with the Aerospace Logistics segment recording the strongest growth of +62.2% to RM22.3m.
QoQ. CNP improved +65.4%, driven mainly by stronger profitability across the Group’s operations, with PBT margin expanding by +380bps to 5.9%, despite revenue declining -3.5%. The margin expansion was supported by ongoing cost optimisation initiatives and improved pricing discipline. Meanwhile, the sequential decline in revenue across all segments was largely attributable to seasonal weakness in 1Q relative to 4Q, in line with the typical post-peak season slowdown and Lunar New Year disruptions.
Outlook. We remain positive on AGX’s near-term prospects, supported by healthy freight demand, ongoing regional expansion and improving trade flows across the Asia-Pacific region. While elevated crude oil prices have increased freight costs, management indicated that the Group has been able to pass on most of the additional costs to customers through its cost-plus pricing model, supporting stronger absolute gross profit in the near term. Meanwhile, we expect the higher-margin Aerospace Logistics segment to remain a key earnings driver, supported by continued fleet expansion by regional airlines and strengthening aviation maintenance activity. Contributions from the Group’s recently secured aerospace service agreements with Malaysia Airlines Berhad, VietJet Air and Sun PhuQuoc Airways are expected to begin materialising, supporting stronger performance in the coming quarters. In addition, contributions from associate company are expected to improve, supported by the absence of one-off IPO-related expenses and continued growth in regional cross-border e-commerce activity. Overall, we believe AGX remains well-positioned to benefit from ongoing supply-chain diversification, rising cross-border trade and the gradual recovery in regional aviation and manufacturing activities.
Earnings Revision. We keep our earnings forecasts unchanged.
Valuation. We maintain our BUY call with a higher TP of RM0.69 (from RM0.62), based on 12.2x PE multiple applied to rolled forward FY27F EPS of 5.6 sen, supported by a three-star ESG rating.
Risk. Exposure to volatile trade flows, fuel price swings and fluid freight rates.
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| Currency | Buy Rates (RM) | Sell Rates (RM) |
|---|---|---|
| USD | 3.966740 | 3.992643 |
| EUR | 4.617355 | 4.624496 |
| CNY | 0.586605 | 0.586924 |
| HKD | 0.506140 | 0.509973 |
| SGD | 3.097878 | 3.121465 |