Technical Analysis. Ajiya may trend higher after pushing above the RM1.50 psychological mark and hit a new multi-year high yesterday. As the stock also broke out of the 1-week bullish flag pattern, it may see additional strength in the near term. A bullish bias may emerge above the RM1.48 level, with a stop-loss set at RM1.33, below the 20-day EMA. Towards the upside, the near-term resistance level is seen at RM1.70, followed by RM1.80.

Company Background. Ajiya is principally involved in the manufacturing and supply of building materials, with more than 30 years of experience in the construction industry. The group was established in 1990 as a metal roll-forming company and ventured into the business of manufacturing high value-added safety glass products in 1996. To date, Ajiya has a network of 16 factories or warehouses with offices throughout Malaysia and Thailand.

Prospects. (i) Demand for Ajiya Green Integrated Building System (AGiBS) will likely increase as the adoption of Industrialised Building System (IBS) technology among property developers in Malaysia rise. (ii) Stronger take-up for AGiBS would be a key catalyst for Ajiya’s metal roll-forming and safety glass divisions, considering that both divisions supply components to be used under AGiBS. (iii) Recovery trend for building materials will persist as the world gradually moves towards normalisation in the post-COVID era.

Financial Performance. In 9MFY22, the group reported a better revenue of RM219.9m (+23.3% YoY) with a PAT of RM21.4m (+42.1% YoY). This was mainly due to the efforts in making its operations more efficient and undertake various measures to reduce operating costs for sustainable long-term growth.

Source: AmInvest Research - 15 Nov 2022