Industrial Builder

AME Elite Consortium Bhd (AME) is a total solutions provider for industrial parks and factory units. Starting out as a contractor for industrial buildings in 1995, it has since expanded into industrial park development, leasing of industrial properties and managed workers’ dormitories. AME benefits from rising demand for industrial properties in Malaysia due to trade diversion amidst the ongoing USChina trade war. We initiate coverage on AME with a BUY call and target price of RM1.83, based on 30% discount to RNAV.

Integrated Industrial Solutions Provider

AME provides integrated and comprehensive solutions encompassing the design and construction of customised large manufacturing plants, development of industrial parks, and the sale and lease of industrial factory units. It has a proven track record of completing about 200 large manufacturing and industrial buildings for various industries as well as four industrial parks in Johor.

High Order Book and Remaining Gross Development Value

AME has a high remaining construction and engineering services order book of RM376.9m, equivalent to 1.4x FY19 revenue, to be completed by 2Q21. For the property development division, it has remaining industrial land with gross development value (GDV) of RM1.61bn, mainly in 2 of its industrial parks in Johor, ie, i-Park@Indahpura and i-Park@Senai Airport City (SAC). The RM150m acquisition of a 77-acre land for i-Park@SAC Phase 3 expansion added another RM555m to the total GDV.

Valuation

We initiate coverage on AME with a BUY call and target price of RM1.83, based on 30% discount to RNAV. CY20E core PER of 9.5x based on IPO price is attractive compared to our Construction Sector (excluding GAM, IJM and MRC) weighted average core PER of 13.8x. We like AME for (1) its niche gated and guarded industrial park development projects; (2) a total solutions provider for local and multinational companies to build manufacturing plants and logistic warehouses; and (3) its value engineering expertise to reduce construction cost

Source: Affin Hwang Research - 10 Oct 2019