Review

• Able Global Berhad’s (AGB) 1QFY24 core net profit of RM15.5mn (+99.5% YoY) came in above expectations, accounting for 29% of ours and consensus’ full-year estimates. The earnings outperformance was mainly due to lower-than-expected finance and administration costs.

• 1QFY24 core net profit soared 99.5% YoY, in tandem with a 17.2% YoY revenue growth to RM171.2mn. The robust improvement was driven by increased sales demand from both the tin can manufacturing and F&B segment.

• Tin can manufacturing: Revenue rose by 10.8% YoY to RM30.8mn, thanks to increased sales demand. However, despite this growth, the PBT remained flattish YoY at RM4.5mn, primarily due to the increased production costs incurred during this quarter.

• F&B: PBT surged threefold to RM16.7mn, in tandem with a 18.7% YoY revenue increase to RM140.4mn, driven by a rise in sales demand.

• The group declared a first interim dividend of 2.0sen/share (vs. 1QFY23: 1.0sen/share).

Impact

• We are maintaining our earnings forecast at this juncture, pending more updates from the analyst briefing.

Outlook

• The outlook for the Tin manufacturing segment remains challenging due to market competitiveness. Nonetheless, segmental performance is expected to remain stable, buoyed by a softening in steel prices from their peak.

• Input costs (skim milk powder and whole milk powder) remained stable in this quarter, contributing to a 7.2%-pts YoY improvement in the PBT margin for the F&B segment, reaching 11.9%. We expect the F&B segment to remain profitable in the next quarter, driven by robust demand for dairy products amid stable input costs.

Valuation

• We put our target price of RM1.94/share and Buy recommendation under review pending more updates from the upcoming analyst briefing.

Source: TA Research - 29 May 2024