KLSE Money Maker

What you should KNOW about Ageson Bhd results.

Publish date: Sun, 27 Nov 2022, 04:42 PM

Ageson Bhd (KLSE: AGES, 7145) registered a revenue of RM90.33 million and profit after tax and minority interest of RM3.13 million in 5QFY23, which was largely contributed by the trading of construction materials, and minimal contribution from its’ property development segment.

·        For the quarter under review, no YoY data was available as the company had shifted its financial year-end from December 31 to June 30.

·        AGES had a gross profit margin of 12.56% in the current quarter, which was significantly higher than other construction material trading companies, such as the newly listed Unitrade Industries Bhd (KLSE: UNITRAD, 0247) with a 7.55% gross profit margin in its Q1FY23 results.

·        On QoQ basis, the AGES had a drop of 22.57% in revenue largely due to slower construction material trading activities as political instability was in place, hence, the company’s clients are taking a “watch and see” stance; in which the management expects to be normalized in the coming quarters.

·        In core profit terms, AGES had a negative other operating income and positive operating expenses, this was due to a restructure in the trade receivables of the company, as some of the clients were challenged by a change of government. Hence, AGES had a RM22.24 million on-paper profit deriving from a reversal of impairment losses on a single trade receivable.

·        With a gearing ratio of 0.11x, we expect somewhat aggressive gearing up activities from AGES to increase their inventories level to cater for post-election demand. As at 30th September 2022, the company only had a moving inventory of RM26.35 million, which we would expect more from a trading company.

Nevertheless, the management of AGES is upbeat on their prospects where the company will be diversifying into the management of IoT foodbox networks as well in food retailing business, in which the company had signed the MoU in conjunction with Kobena since early October. Based on its closing price on 25th November 2022, AGES had a closing price of RM0.23 with a PER of 3.08x, which was approximately 63.25% lower than the industry 5-year average.

We expect re-rating to happen for AGES soon, with a pegging 6.0x forward PER, resulting in a 10.34% discount to the industry forward PER for FY23.

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