Able Global Berhad (AGB) reported a 125% YoY growth in 4QFY23 net profit to RM18.2m, driven by better performance from the F&B segment. After adjusting for non-core items, AGB’s core net profit stood at RM17.4, bringing the full-year FY23 core net profit to RM50m. Results were above our and consensus estimates, accounting for 111% and 117% respectively. The discrepancy in our numbers were mainly due to the stronger-thanexpected demand for dairy products. In view of this, we raise our forecast by 7-11% for FY24-24F. We continue to remain upbeat on AGB, as we believe that its earnings growth will be supported by the robust demand for dairy products, stronger contribution from its Mexico JV as well as the lower raw material costs. We maintain our Outperform call on AGB, with a higher SOTP-based TP of RM1.90, following our earnings adjustment.

• 4QFY23 revenue increased by 32.2% YoY to RM169.3m, contributed by better performance from its F&B segment (+50.7% YoY) despite being partially offset by the decline in Tin segment sales (-15.4% YoY). We believe that the stronger F&B sales was mainly due to the year-end festive spending.

• 4QFY23 core net profit jumped by 144.8% YoY to RM17.4m. In tandem with greater demand for dairy products, AGB’s F&B segment saw its PBT margin expanded by 12 ppts to 14.2%. In addition, we believe that the lower raw material costs and favourable exchange rate helped to lift AGB’s profit margins.

• Dividend. AGB declared an interim dividend of 2.0sen, bringing the full-year FY23 dividend declared to 6.5sen (FY22: 4.0sen), translating to an attractive dividend yield of 4.1%.

• Outlook. Going into FY24, we expect AGB to post an 11.5% YoY growth in earnings, on greater production efficiency from the robust demand for dairy products as well as stronger contribution from its Mexico JV. While the group is still waiting for the export approval for full cream milk products, we understand that AGB is looking to export its current product range to new export markets in order to increase its utilization rate. We foresee an uptick in AGB’s profit margins, underpinned by the lower raw material cost (milk and CPO) whilst being supported by the stronger USD.

Source: PublicInvest Research - 27 Feb 2024