Overview

Able Global Berhad (ABLEGLOB), formerly Johore Tin Berhad, is a tin can manufacturing company that currently primarily serves the F&B industry. The F&B segment exports over 80% of its dairy goods (sweetened condensed milk, evaporated milk, and UHT full cream, as well as flavoured milk and milk powder), largely to the American continent, the South-East Region, and West Africa. In addition, ABLEGLOB began expanding into Middle Eastern markets.

Investment Themes

• Mexican operations are ramping up. F&B segment has significantly contributed to the group’s performance, accounting for 82% of 1Q24 revenue and 80% of net profit (figure 1). ABLEGLOB is actively expanding its presence in overseas markets leveraging its foothold in Mexico, which enhances logistical feasibility for neighbouring countries. Meanwhile, Meanwhile, the group plans to enter Middle Eastern countries. We believe ABLEGLOB holds a competitive advantage due to its Halal certifications, which mitigate potential barriers compared to its competitors. Given the strong demand, the utilisation rate of its Mexican operations is forecast to reach 40% in FY24 (up from 18% in 1QFY24).

• Ventured into property segment. ABLEGLOB has acquired 297.5 acres of land, with 89.3 acres allocated for manufacturing expansion and property development. The land approvals are in the final stage before construction commences. The property development is estimated to have a Gross Development Value (GDV) of RM1.5bn, to be executed in three phases. We are optimistic about this new venture, as contributions from the property segment are expected to support the main revenue stream over the next 3 to 5 years.

• Attractive valuation. ABLEGLOB is currently trading at an attractive valuation compared to its peers Based on the current share price, ABLEGLOB's FY24 PER stands at a modest 10.5x, significantly lower than the average PER of 21.5x among its peers. We anticipate the group to deliver strong earnings growth of 22.7% in FY24.

Risk

• Risks factors include: i) higher-than-expected soft commodity price and ii) strengthening of the RM/USD exchange rate.

Recommendation

• Our TP for ABLEGLOB is RM2.57/share, based on Sum-of-Parts methodology where we ascribe 7x PER for its Tin manufacturing division and 14x PER for its F&B division. Maintain BUY.

Source: TA Research - 2 Jul 2024