In the rapidly advancing landscape of global digitization, the electronic manufacturing industry has witnessed a corresponding surge in sophistication, driven by the electrification and smartification of end markets. As a leading electronic manufacturing services provider in Malaysia, Aurelius Technologies Berhad (ATECH, 5302) has demonstrated remarkable resilience and adaptability within its domain.

Just yesterday, ATECH announced a commendable quarterly performance, highlighting growing revenue and profits for the fiscal year 2024. Without further ado, let's delve into ATECH's performance in the latest second quarter (Q2 FY2024).

Revenue Comparison (YoY -2.59%, QoQ +15.22%)

As of July 31, 2023, the company reported revenues of approximately RM109.04 million, a decrease of about 2.59% compared to RM111.95 million in the same period last year. This decline is primarily attributed to customers deferring orders for the sake of reducing their product inventory.

(Note: ATECH's fiscal year ends on January 31 each year.)

Out of the RM109.04 million in revenue, approximately RM90.55 million originated from Communication & IoT Products, RM12.59 million from Electronics Devices, and the remaining RM5.88 million from Semiconductor Components. Communication & IoT Products and Electronics Devices experienced year-on-year declines of approximately 2.97% and 3.96%, respectively. However, Semiconductor Components saw a year-on-year increase of approximately 6.90%.

In terms of geographical distribution, the United States emerged as the primary market revenue contributor, accounting for approximately RM61.15 million in revenue this quarter. Following the U.S. were Malaysia, the Asia-Pacific region (excluding Malaysia), and Europe, contributing approximately RM22.14 million, RM14.62 million, and RM11.10 million in revenue, respectively.

In comparison to the previous quarter, the company's revenue increased by approximately RM14.41 million or 15.22%. Management did not elaborate on this increase, but it can be inferred that customer orders are gradually on the rise. Additionally, this quarter's report reveals that as of September 18, 2023, the company's order book stands at approximately RM322.00 million, reflecting an increase of about 11.80% from the approximately RM288.00 million disclosed in the previous quarter's report.

Net Profit Comparison (YoY +49.22%, QoQ +30.89%)

Given the higher revenue from the U.S. market and the strengthening U.S. dollar, the company's net profit increased by approximately 49.22% year-on-year to approximately RM10.55 million.

Furthermore, due to operational efficiency optimizations and higher profit margins contributed by the product mix, the company's net profit also increased by approximately RM2.49 million or 30.89% quarter-on-quarter.

It is worth mentioning that ATECH is currently a net-cash company, holding a substantial cash reserve of approximately RM65.64 million. The company announced the distribution of an interim dividend of RM0.0230 in this quarter, with an ex-dividend date of October 13, 2023, payable to shareholders on November 10, 2023.

Outlook

In the face of global economic, geopolitical, supply chain, and financial market uncertainties, the company will prudently invest in technology infrastructure to further enhance its IoT and automotive manufacturing capabilities, particularly in electric vehicle (EV) components.

Reportedly, the company plans to undertake a two-phase expansion project on industrial land acquired in Kulim Hi-Tech Park, doubling its built-up area from the current 260,000 square feet to 520,000 square feet. This is expected to bolster the company's automotive parts manufacturing, facilitate outsourced semiconductor assembly and testing (OSAT) business, and pave the way for advanced electronics manufacturing.

In conclusion, the management remains cautiously optimistic about the company's performance in the fiscal year 2024. So, what are your thoughts on the predictions that the semiconductor sector will rebound by the end of this year?

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Disclaimer: The above is purely for educational purposes and reflects personal opinions. It does not constitute any buying or selling recommendations.

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