Aurelius Technologies Berhad - FX and Supply Chain Headwinds Delay the Recovery Runway
Tue, 01-Sep-2026 07:42 am
by Research Team • Apex Research

Counter

ATECH (5302)

Target Price (RM)

0.72

Recommendation

Hold

  • ATECH's 1HFY26 core net profit of RM23.0m (-35.1% YoY) coming in below expectations at 40% of our FY26F forecast and 37% of market consensus, dragged by supply chain disruption and weaker USD against MYR.  

  • We stay cautious into 2HFY26. Although 2QFY26 performance improved QoQ, in line with management's initial guidance last quarter, this remains tied to persistent USD/MYR weakness eroding translated export revenue and continued supply chain disruptions, including PCB and memory component shortages.

  • We cut our FY26F/FY27F/FY28F core net profit forecasts by 27%/16%/17% from RM57.0m/RM67.6m/RM73.7m to RM41.6m/RM56.8m/RM61.1m.

  • We downgrade our call from BUY to HOLD with a lower TP of RM0.72 (previously RM0.87), based on an unchanged 18x PE multiple applied to our lower FY27F core EPS of 4.0sen (previously 4.8sen).

 

Below expectations. ATECH's 2QFY26 recorded a core net profit of RM11.2m, after adjusting exceptional items including net forex gain (-RM0.3m) and fair value loss on investment (RM0.2m). 1HFY26 core net profit came in as RM23.0m, which is below our estimates, accounting for only 40% of our FY26F core net profit forecast and 37% of market consensus. 

QoQ. Revenue rose 8.5% QoQ to RM141.5m (1QFY26: RM130.4m), attributable to higher production volumes from its largest segment, Communications and IoT products. Nevertheless, Core net profit declined 5.0% QoQ to RM11.2m (1QFY26: RM11.8m), mainly due to adjustments of exceptional items.

YoY. Revenue fell 13.2% YoY to RM141.5m (2QFY25: RM162.9m), mainly due to weaker revenue contribution across major segments. Core net profit declined 44.4% YoY to RM 11.2m (2QFY25: RM20.2m), mainly due to selective supply chain disruptions hampering production, and weaker USD against the RM, which reduces the RM-translated value of the Group's largely USD-denominated export revenue from Americas, Asia Pacific and Europe.

YTD. For 1HFY26, revenue fell 12.5% YoY to RM271.9m (1HFY25: RM310.8m), dragged by supply chain disruption and weaker USD against RM. Core net profit declined 35.1% YoY to RM23.0m (1YFY25: RM 35.5m), mainly due to lower revenue contribution across all major segments, although partly offset by RM7.4m from Automotive segment.

Dividend. The Group declared a second interim single-tier dividend of 0.55sen per share for FYE 2026 amounting to RM7.2 million, with an ex-date of 15 Sep 2026.

Outlook. We stay cautious on ATECH's recovery into 2HFY26, underpinned by three factors: (i) the RM472.3m order book as at 10 August 2026, with no material rescheduling or cancellation reported to date, anchors near-term revenue visibility, though this rests mostly on already-qualified Automotive customers now in commercial production, while the broader NPI pipeline for advanced IoT, automotive electronics and AI (including physical AI)-related products, together with new-customer diversification under “P5”, remains pre-commercialisation and pending conversion into firm orders; (ii) the precision plastics expansion, with factory layout planning targeted for completion by end-June/mid-July 2026 and construction commencing only in late-4QFY26 (per our 1QFY26 note; not reconfirmed in the 2QFY26 filing), should start contributing from FY2027F onward, making this largely a FY2027F story rather than an immediate earnings driver; and (iii) the Automotive segment, a maiden contributor with no FY25 base, adds diversification away from the core Communications and IoT and Semiconductor Components segments rather than near-term core growth, with commercial production ramp for already-qualified customers ongoing alongside audits for new end-customers. 

Earnings Revision. We cut our FY26F/FY27F/FY28F core net profit forecasts by 27%/16%/17% from RM57.0m/RM67.6m/RM73.7m to RM41.6m/RM56.8m/RM61.1m, considering three factors where (i) Persistent USD/MYR weakness eroding translated export revenue, and (ii) Continued supply chain disruptions that caused orders to delay.

Valuation & Recommendation. We downgrade our call from BUY to HOLD with a lower TP of RM0.72 (previously RM0.87), based on an unchanged 18x PE multiple applied to our lower FY27F core EPS of 4.0sen (previously 4.8sen), based on (i) lower earnings base, and (ii) persistent USD/MYR weakness and supply chain disruptions continue to weigh on revenue and margins.

Risks. FX volatility, Prolonged or worsening supply chain disruptions, Escalation of the Iran conflict and Strait of Hormuz disruptions, Orderbook execution risks

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