Aurelius Technologies Bhd (ATECH) is an electronic manufacturing services (EMS) provider focusing on industrial electronic products. Offering engineering support services, prototyping, board assembly, mechanical assembly, testing, labelling, packaging and direct shipment fulfilment, ATECH provides EMS for printed circuit board assembly (PCBA), sub-assemblies, box-build and system build products. ATECH expanded into the manufacturing of semiconductor components comprising multi-component integrated circuit (IC) for internet of things (IoT) applications in FY20 and the mass production of these semiconductor components commenced in FY21. As at 1 Nov 2021, ATECH has a total of 11 Surface Mount Technology (SMT) lines of which 4 SMT lines are dedicated to the manufacturing of semiconductor components. ATECH's customer base is spread across 11 countries covering Asia Pacific, the Americas and Europe.

Moving forward, ATECH intends to expand its production facilities, which in turn will increase its production capacity, and upgrade its manufacturing facilities towards Industry 4.0, besides introducing new products. We derive a fair value of RM1.64 based on a 21x PE multiple to its FY23F EPS of 7.8sen. The IPO is expected to raise approximately RM104.7m from the issuance of 77.0m new shares. Besides utilising 38.2% of the proceeds to acquire new machinery and equipment, 28.2% and 26.9% of the proceeds are allocated for repayment of borrowings as well as working capital, respectively.

• Growth drivers. ATECH’s growth will be dependent on: i) expansion of semiconductor component manufacturing services, ii) construction of a new manufacturing plant, iii) purchase of new machinery and equipment, iv) manufacturing facilities upgrade towards Industry 4.0, and v) introduction of new products.

• Competitive strengths. ATECH’s competitive strengths include: i) provision of one-stop manufacturing solution for industrial electronic products, ii) established track record, iii) capabilities to carry out high melting point and gold soldering, iv) geographical coverage across ten foreign markets, v) various quality programmes and certifications, vi) manufacturing execution system and abilities to develop customised test programmes, together with vii) experienced management and technical team.

• Catalysts. Key drivers may include: i) global trend for digitalisation, and ii) technology upcycle.

• Key risks. Key downside risks, among others, include i) effective competitiveness, ii) reliance on demand and performance of the user industries, iii) dependency on major customers for revenue generation, iv) dependency on imported input materials, and vi) fluctuations in foreign exchange rates.

Source: PublicInvest Research - 3 Dec 2021