Able Global Berhad’s (AGB) 1QFY24 core net profit of RM15.5mn (+99.5% YoY) came in above expectations, accounting for 29% of ours and consensus’ full-year estimates. The earnings outperformance was mainly due to lower-than-expected finance and administration costs.
1QFY24 core net profit soared 99.5% YoY, in tandem with a 17.2% YoY revenue growth to RM171.2mn. The robust improvement was driven by increased sales demand from both the tin can manufacturing and F&B segment.
Tin can manufacturing: Revenue rose by 10.8% YoY to RM30.8mn, thanks to increased sales demand. However, despite this growth, the PBT remained flattish YoY at RM4.5mn, primarily due to the increased production costs incurred during this quarter.
F&B: PBT surged threefold to RM16.7mn, in tandem with a 18.7% YoY revenue increase to RM140.4mn, driven by a rise in sales demand.
The group declared a first interim dividend of 2.0sen/share (vs. 1QFY23: 1.0sen/share).
Impact
We are maintaining our earnings forecast at this juncture, pending more updates from the analyst briefing.
Outlook
The outlook for the Tin manufacturing segment remains challenging due to market competitiveness. Nonetheless, segmental performance is expected to remain stable, buoyed by a softening in steel prices from their peak.
Input costs (skim milk powder and whole milk powder) remained stable in this quarter, contributing to a 7.2%-pts YoY improvement in the PBT margin for the F&B segment, reaching 11.9%. We expect the F&B segment to remain profitable in the next quarter, driven by robust demand for dairy products amid stable input costs.
Valuation
We put our target price of RM1.94/share and Buy recommendation under review pending more updates from the upcoming analyst briefing.
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....