AME Elite Consortium Bhd (“AME”), an integrated industrial space solutions provider is making its debut on the MAIN market today. AME’s strong industrial park foothold in Johor is setting it to be a potential USChina trade war beneficiary from potential trade diversion. BUY with a target price of RM1.48 based on 12x PER FY20 as per the Bursa Construction Index.

AME is principally involved in constructing industrial properties and large manufacturing plants, industrial park developments, engineering services and property investment and management services. The comprehensive services provided by AME allow them to undertake wide variety of customised industrial property projects, complemented by its engineering capabilities to deliver projects via better cost-savings and quality control. With construction being the major revenue contributor (~69%), it has to date completed around 200 large manufacturing and industrial buildings.

AME has launched 4 industrial parks with 2 more ongoing projects namely i-Park @ Indahpura (Phase 3) and i-Park @ Senai Airport City (“i-Park @SAC”) (Phase 1 & 2) with gross development value of RM456m and RM717m respectively. The group is able to attract MNCs and major industrial companies as evidenced by the 95% take-up rate (79% sold, 16% leased) of the phase 1 and 2 of i-Park @ Indahpura. In addition, the higher occupancy rate of close to 80% of its worker dormitory business also provides source of recurring rental income.

62.2% of the IPO proceeds is earmarked for future developments and investment projects. The group intends to replicate their current business model of industrial park development outside Johor especially to industrial state such as Penang and Selangor. 20.7% will be utilised for the working capital of the i-Park @ SAC. Another 8.1% is allocated for capacity expansion of its precast concrete fabrication, allowing them to accept larger and heavier customised precast concrete products.

AME has a construction orderbook of RM376.9m to be recognised in next 18 months and unbilled sales of RM71.4m. Post listing, balance sheet will remain manageable with a net gearing ratio of 26%. AME has a dividend policy of 20%, translating to an expected dividend yields of 1.9% and 2.1% in FY20 and FY21 respectively.

Source: Rakuten Research - 14 Oct 2019