Fundamental Analysis of AT(0072) as at June 17 2021
AT Current Share Price: RM0.07. 1st Target Price: RM0.134, 2nd Target Price: RM0.28, 3rd Target Price: RM0.80
buyWarrant_eatBuffet
Publish date: Thu, 17 Jun 2021, 09:01 PM
Recently, many people are discussing about AT Systematization BHD (0072) share price. The share price of AT will be going up or continue going down in the future? This article discusses about the future share price of AT from the fundamental and long-term perspective. The first target price is RM0.134, second target price is RM0.28, third target price is RM0.80.
Recently, many people are discussing about AT Systematization BHD (0072) share price. The share price of AT will be going up or continue going down in the future? This article discusses about the future share price of AT from the fundamental and long-term perspective. AT share price is RM0.07 currently. The first target price is RM0.134, second target price is RM0.28, third target price is RM0.80.
1st conclusion - After AT had completed 13 glove dipping lines, the first target price will be RM0.134 (if glove sector remains downtrend like current situation). When the glove sector recovers to a normal level (not too high like previous and not too low like now), the second target price will be RM0.28.
The reason behind 1st conclusion:
From the news above by The Edge (October 28, 2020), AT said they will achieve 1 single former glove dipping line (run at a speed of 15,000 pieces of gloves per hour) + 12 double former glove dipping line (run at a speed of 24,000 pieces of gloves per hour) by the middle of 2021.
15,000 + 12 X 24,000 = 303,000 pieces per hour. So, they can produce 303,000 pieces of gloves per hour in total.
303,000 pieces X 24 hours X 30 days X 12 months = 2,617,920,000 pieces per annum (2.62 bil pieces).
From the news above (May 06, 2021), we can see that the average selling price (ASP) of nitrile glove had declined (also stated in Supermax latest quarter report), assumed to be 40 USD per 1000 pieces (not per 100 pieces).
Let’s calculate the future income from gloves per annum (after they had successfully completed 13 glove dipping lines). 2,617,920,000 pieces per annum, selling at 40 USD per 1000 pieces.
2,617,920,000 X 40 USD / 1000 = 104,716,800 USD per annum
After converting to MYR (x4.13 as at June 17,2021), AT can earn approximately RM432.48 Mil per annum of income from its glove business.
https://www.theedgemarkets.com/article/profit-margin-50-lifts-supermax-2q-net-profit-record-rm106-bil-declares-38-sen-dividend#:~:text=Corporate-,Profit%20margin%20of%2050%25%20lifts%20Supermax%202Q%20net%20profit%20to,bil%2C%20declares%203.8%20sen%20dividend&text=KUALA%20LUMPUR%20(Jan%2029)%3A,on%2Dquarter%20jump%20from%20RM789.
From the news above, we can know that Supermax’s profit margin is 50%. Let’s assume AT’s profit margin is 40%:
RM432.48 Mil X 40% = RM172.992 Mil of profit before tax (PBT)
When we refer to the four quarters before AT started glove business (Q-date 31/DEC/2019 to 30/SEP/2020), their financial reports showed total RM14.64 Mil of loss from previous business. Assume that when they gain huge profit from new glove business but their previous old business still making same level of loss:
RM172.992 Mil (from new glove business) – RM14.64 Mil (from previous old business) = RM158.352 Mil
Thus, this new glove business really can save AT from making continuous loss in previous old business. After paying 24% of tax, the profit after tax (PAT) will be RM120.35 Mil per annum.
Currently, there are 4289.11 Mil of AT shares. The Earning Per Share (EPS) is RM120.35 Mil / 4289.11 Mil = 0.028. As we all know the glove sectors are undergoing downtrend currently, Top Gloves (PE-4.4), Supermax (PE-3), Kossan (PE-4.3), Hartalega (PE-9.9), Rubberex (PE-4), Careplus (PE-3.7), Comfort (PE-4), these glove company have an average PE of 4.8. If we assume AT’s PE to be 4.8, then the share price will be 0.028(EPS) X 4.8(PE) = RM0.134
Thus, the first target price is RM0.134. When the PE of glove sector recovers to a fair value of 10 (not too high like previous and not too low like now), the second target price of AT should be 0.028(EPS) X 10 (PE) = RM0.28.
Conclusion 2: When AT completed 13 glove dipping lines in first factory and started to build the second factory, it can prove that AT is a trustable company which take concrete action on their plan. Investors of AT will have great confident in the second factory (additional 48 glove dipping lines). By that time, despite the demand of glove assume to be decreased by 25% and ASP falls to 30 USD, the target price will be at least RM0.80.
The reason behind second conclusion:
From the news above (February 23, 2021), we can see AT's progress in glove business. They had completed 2 lines in their first factory (in Chemor, Perak), line 3,4,5,6 scheduled for completion by April 2021. I assume they had delayed their plan due to MCO and FMCO, so I assume line 7,8,9,10 will be completed around July, line 11,12,13 will be completed around September. Although they are falling behind the original timeline (to complete 13 lines by June), but we can see their concrete progress and great effort paid to achieve the target despite FMCO. The success of AT glove business can be expected to start shining in the coming quarter report since AT started to sell gloves in the first quarter of 2021.
From the news above (February 23, 2021), we can also see that AT planned to build second glove factory with additional 48 glove dipping lines, they will have 48 (in new factory) +13 (in previous factory) = 61 lines eventually. Let’s assume they have 1 single former glove dipping line (run at a speed of 15,000 pieces of gloves per hour) + 60 double former glove dipping line (run at a speed of 24,000 pieces of gloves per hour):
1 X 15,000 + 60 X 24,000 = 1,455,000 pieces of glove per hour
1,455,000 X 24hours X 30days X 12months = 12,571,200,000 (12.5712 bil) pieces of glove per annum
If we assume that the covid-19 pandemic situation become better, the ASP of nitrile glove falls to 30 USD per 1000 pieces, and the demand of gloves decrease 25%.
12,571,200,000 X 75% X 30 USD / 1000 = 282,852,000 USD (approximately RM1.168 bil), AT can earn RM1.168 bil per annum from the glove business despite ASP falls until 30 USD and demand decrease 25%.
If AT profit margin of glove is 40%, RM1.168 bil X 40% = RM467.27 Mil of profit before tax
If AT gain RM467.27 mil of profit from glove but remain same level of loss (RM14.64 Mil) from other business, RM467.27 Mil – RM14.64 Mil = RM452.63 Mil
Profit after tax is RM452.63 Mil X 76% = RM344 Mil (PAT)
Currently, there are 4289.11 Mil of AT shares. The Earning Per Share (EPS) is RM344 Mil / 4289.11 Mil = 0.08. When PE value of glove sector recover back to 10, the share price of AT will be 0.08(EPS) X 10(PE) = RM0.80. Thus, When AT completed 13 glove dipping lines in first factory and started to build the second factory, the target price will be at least RM0.80 despite the demand of glove assume to be decreased by 25% and ASP falls to 30 USD, the target price will be at least RM0.80.
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Discussions
1 person likes this. Showing 44 of 44 comments
We have to be patient and see the development of AT. If the coming quarter report show us something about the glove business, then it should be no harm to trust the company. If they eventually complete 13 lines, it should be profitable to trust the company.
2021-06-17 21:34
I posted this article to share my point of view with all fundamental and long term investor. I noticed the intrinsic value of this company and hope to discuss with other long term fundamental investor. Please give me constructive and useful feedbacks on my perspective and calculation based on the article. Thank you.
Citadel9999, talk talk about knowledge got use, talk talk about nonsense no use.
2021-06-17 21:58
Putting up creative report thie company magement staff are inefficient n hopeless even with glove manufacturing activity included I am not surprised they report a loss for the coming quarter
2021-06-18 07:15
Totally agreed with you Cnlim , This Q sure big loss let's why operators disposed shares
2021-06-18 07:23
Con stock related to Fintec!!! The public investors already know the Fintec and its related companies in Bursa; so not so easily con by them again !!! Mak and his gang can go and fly kite !!!
2021-06-18 10:27
The fact that they raised money through issuing shares as well as esos(diluting shareholder ownership), high start up cost (hard to achieve good return on the first year), increasing competition, lack of channel to distribute their glove will ultimately affect their profitability and capacity utilisation (cant expect them to sell all they produce right?.
2021-06-18 10:58
What is the time line for these target 1st price & 2nd target price ? 1 years or more? it's take 8 months to fall from 29.5sen in 16 November 2020 to 7 sen in June 16 2021, so need to wait almost a year to reach 2nd target?!
2021-06-18 11:05
U must be trapped at condo since u publish this to lure ppl in. This counter is run by syndicates. Tayor.
2021-06-18 12:18
Fintec group, bad reputation already,difficult to gain back investor confident,look at focus, mtouch etc all toilet papers
2021-06-18 13:47
no one talk about glove anymore..please move on to recovery sector..glove story is sooo yesterday..all those TP is useless & glove production line addition is pointless as we've seen in on many glove stocks..when nation is at full recovery, no one will look at glove stocks like how they look at it last year
2021-06-18 13:55
buyWarrant.. I think your theoretical computation is only make sense if the MD is executing it right.. really sell the gloves.. else just is con
2021-06-18 14:30
If AT management is sincere n honest, they should act like mahsing. Make the proper announcement in the media including dates lines are running , certifications applied n other necessary info. So far nothing , it does seem strange???
2021-06-18 15:08
Currently fundermentals alone is unable to move up the shares price . The more you calculated the company financial aspects in the long term will subsequently tend u2 to buy more and more to avrg down.
What about if things never worked the way out despite with sounds financials backup . Ur entire resources will stuck up and Thurs will disappointed u being too realistic to believe the stock markets is not just own up to fundermentals alone ?
2021-06-18 17:42
[MUST READ] Important message for all investors who are planning to invest in AT or existing AT shareholders
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I noticed many account in i3Investor here saying AT as a "fraud company", "using fake news to trap investors in high price", "not producing any glove at all", and so on. Some of them even insulted AT company director.
I started to worry about the decision I had made recently to invest in this company, then I quickly search on Google about those negative statements shared on i3Investor. After searching on the internet, I found out there are NO such negative news reported by official media. But I noticed there are some people created unofficial websites to spread such negative statement.
This made me felt curious: who would do this kind of thing? Why are they trying to spread fake negative news about a company and have time to keep posting on the internet almost every day?
Let us think about it together:
1. If you are holding a company's shares, would you spread fake negative news about the company to others? No, because it will affect the price to drop. So we know those people are not AT shareholders.
2. If you are not a company shareholder and you are not interested to the company, would you keep paying attention to the company and spread fake news about it? No, because you won't spend time on things you are not interested, unless somebody pay you for doing it. So maybe those people were paid by AT's competitor company.
3. If you have already sold AT's shares before, would you spread fake negative news about the company to others? Yes, so that the share price will fall and you can buy back at a lower price. So those people are hoping the fake news could make the share price drop and they can buy back at a lower price.
4. If you are planning to buy AT's share and this is your first time, would you spread fake negative news about the company to others? Maybe yes, because you are hoping the fake news could make the share price drop and you can buy at a lower price.
In conclusion, those who keep spreading fake negative news about AT are planning to make the share price drop so that they can collect AT shares at a lower price. Second, maybe AT's competitors in the market paid them to do it.
Thank you for reading.
2021-06-18 22:41
buyWarrant_eatBuffet
A good write up. But what is the time line? 1 yr to reach 0.134? Then ?? to reach 0.28?? And ??? time to build another 48 lines? 2-3 years? When will TP -> 0.8 be reached? Another 2 years???
And, doubt on the mgmt's silence on their progress s.a make the proper announcement in the media including dates where lines are running , certifications applied n other necessary info.as lawpct28 had said above???
2021-06-19 06:53
AHAHAH OP I don't know what you're smoking, but I want it too. You're Stockiss in disguise, aren't you? Just admit it. Your ATIAN group members have already seen through your lies
2021-06-19 10:43
It's quite obvious AT's a scam la. You see the boss, when their glove factory under construction they made so much hoo haa on social media about it, even invited stock gurus to come visit. Then they made a big show opening ceremony, even had lion dance and invited some menteri to attend, wah so terrer
But after that? Radio silence. the boss kan love to show off, why aren't they showing off their factory in production? show off the tons of gloves they've made and ready to ship out? even inix is doing that to show they really had a production running.
just look at AT's facebook page, absolutely no update after the GRAND opening ceremony on feb.
all of you just cut loss la, take it as paying tuition fee and never buy this sort of conman counter anymore
2021-06-19 10:44
Hi King36, the target RM0.134 will reach when they completed 13 lines (expect in October 2021). Target RM0.28 will reach when glove sector recovers to normal level (expect in 6 months). All of us know that glove sector is undergoing downtrend currently, but stock will not undergo downtrend forever, it will recover to a normal level when it reaches a downtrend limit and meet a strong support. A specific time on when the glove sector will recover cannot be guaranteed, we have to observe the technical chart for this, some day it will change it's direction. The Delta Covid-19 Variant is what the global need to take precaution.
https://www.thesundaily.my/business/at-systematization-expects-revenue...
From this news we can see they already running 2 lines on February 23, 2021, line 3,4,5,6 will be completed in April, 2021. Yes, many people are right, they should make official announcement about the update of following lines, but unfortunately they do not announce. But, I believe no public listed company dare to cheat the public because it would harm their reputation so badly and hard to survive in the future without the trust from public. That is why I believe AT will keep their promises to complete 61 glove dipping lines since they already told so many official media and let so many people know about their plan, if they failed to do it, they will lose trust from so many people.
We can also see "AT has now obtained the CE Marking Certification (allowing gloves to be export to the European region). While AT is the process of applying full certification from the US Food and Drug Administration (FDA), AT has obtained permanent registration with the FDA which allows gloves to be export to USA during this pandemic. Other certifications that are currently in progress of obtaining includes the ISO 13485 and Medical Device Authority (MDA) certification." from the news above about their certification.
https://www.klsescreener.com/v2/announcements/view/3303515
This is the announcement made on February 5, 2021.
The time to reach final target price RM0.80, we have to wait until the opening of second factory + completion of 13 lines in first factory + recovery of glove trend, so I would say December, 2022 is the earliest time.
2021-06-19 14:34
I hope you are not being paid to write all these and speculate those prices...those calc is nothing new..Trade with responsibility and care...
https://www.klsescreener.com/v2/news/view/818927
2021-06-19 20:07
shares issued 4 billion plus, difficult to move up to tp 2 even 20 sen , it will take abt 1 year to reach it
2021-06-19 21:17
sign more mou with other fintech related companies also cannot really go up..
2021-06-19 21:19
Becareful guys，rather buy a stable stock，with value inside，this one could be put out by somebody in the fintec group，they need a story to make big momey from you all，just like jjtpr
2021-06-19 21:20
Posted by buyWarrant_eatBuffet > Jun 19, 2021 2:34 PM | Report Abuse
Hi King36, the target RM0.134 will reach when they completed 13 lines (expect in October 2021). Target RM0.28 will reach when glove sector recovers to normal level (expect in 6 months). All of us know that glove sector is undergoing downtrend currently, but stock will not undergo downtrend forever, it will recover ......
TQVM for your reply.
I will keep the dates and will check accordingly as we sail to end of 2022.
Good Luck.
2021-06-19 21:33
all investors r cursing and feel cheated because since Opening ceremony until now no any single update of any shipments out to customer..
2021-06-20 17:27
thank you everyone for voicing. Let us pray hard for this coming QR (31/6)
2021-06-22 00:27
Haha, I hv different opinion, i forsee price continuous down then issue ri
2021-06-22 21:45
AT50Kshareholder thank you everyone for voicing. Let us pray hard for this coming QR (31/6)
31/6 mana ada.. Sampai mati pun tak dak ooo....
2021-06-28 13:51
QR is out, but shares is still bearish...due alot Esos and PP, dilution diffivult to reserve, maybevtakes 8 months to reach 11 sen.
2021-07-01 06:51
already 4.5 billion shares issued for a company that makes loss for 3 years..they issue esos not producing glove..
2021-07-28 08:59
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Hallelujah ! So this AT is not a conman company after all??? Means shareholders can hope to recover the value of their investment in the near future?? But you are joking right??
2021-06-17 21:17