Review

• Able Global Berhad’s (ABLEGLOB) FY23 core earnings of RM50.0mn (+56.9% YoY) beat our expectations, accounting for 122% and 117% of ours and consensus’ full-year estimates, respectively. The variance largely driven by higher-than-expected sales from the F&B segment amid stable input cost.

• The group declared a third interim dividend of 2.0sen/share (3QFY22: 2.0sen/share), bringing the YTD dividend to 6.5sen/share (FY22: 4.0sen/share)

• YoY, FY23 revenue grew 17.9% YoY to RM648.5mn, attributed to the growth in F&B segment (+24.7%) whilst offset by weaker demand on tin manufacturing segment. Core PBT rose 49.2% to RM67.3mn, thanks to improved performance on F&B segment. However, tin manufacturing segment’s experience slowdown in demand (Revenue -5.6% YoY) in tandem with higher production cost (PBT -29.5% YoY).

• QoQ, 4QFY23 topline declined 4.2% QoQ to RM169.3mn due to the high base effect in 3QFY23, where F&B segment’s revenue dropped marginally by 2.7% and tin manufacturing segment experienced a 10.5% decline in sales demand. Despite, core PBT rose 14.5% due to the stabilisation in raw material costs.

Impact

• We raise FY24 earnings by 10.7% to RM49.6mn after factoring the higherthan-expected demand from its FFB segment.

Outlook

• We are still awaiting the export permission to be granted by the Mexican government to export its full milk products. We gathered that once the group receives the export license, it will likely increase its current utilisation rate of the Mexico plant to c.45% from 30.0% (latest figures in December 2023). This increase will be driven by the new demand from full milk products and repeat orders (skim milk products) from existing clients.

• The input costs (skim milk powder and whole milk powder) are stabilised, margin is well maintained, indicating that profitability should be sustainable at least for 1HFY24. We reckon that the easing in sugar price is likely to be reflected in 2QFY24. Therefore, we do not expect any price adjustment recently unless the prices of raw materials become significantly volatile.

Valuation

• We revise our target price to RM1.75/share (from RM1.55/share previously) based on SOP valuation method. Maintain Buy.

Source: TA Research - 27 Feb 2024