• AME Elite Consortium Bhd (AME) is regarded as an industrial park specialist that involves in industrial park development, leasing of industrial properties and managed workers’ dormitories.

• Capitalising on trade diversion with companies relocating their manufacturing facilities amid the on-going US-China trade war. Property investment & management services segment provide sustainable long term earnings visibility.

• We initiate coverage on AME with a BUY call and fair value of RM2.29, based on 13.0x P/E pegged to its forward FY22f EPS of 17.6 sen.

Investment Highlights

• Established niche industrial park player. We like AME for its position as a niche integrated construction player, specialised in industrial parks tenanted by multinational corporations across the globe which represents approximately 86.0% of clientele in i-Park @ Indahpura. The property investment & management services segment complements the industrial parks through rentals from industrial properties and workers dormitory will provide long term earnings visibility.

• Expansion of industrial park development. AME currently owns 4 industrial parks in Johor, supported by the in-house construction and engineering segment. Apart from the existing expansion (via several phases) in Johor, AME is actively seeking for land banking activities at the other states of Peninsular Malaysia via joint ventures (JV) to replicate their success at Johor.

• Capitalising on trade diversion. Over the years, multinational companies (MNCs) are re-locating their businesses to avoid the implementation of tariffs from the US-China trade war. We view AME i-Parks that are well equipped with comprehensive infrastructures as one of the standout industrial parks to capitalise on the rising FDI.

Source: Mplus Research - 12 Oct 2020