Review

• Able Global Berhad’s (AGB) 1HFY24 core earnings of RM33.9mn was within our expectation, representing 55% of the full-year forecast, but slightly above the consensus estimate at 56%.

• 1HFY24 revenue rose by 15.9% YoY to RM350.5mn. Core earnings more than doubled to RM33.9mn, up from RM16.0mn in 1HFY23. The outperformance was mainly backed by: i) improved demand in both tin can manufacturing and F&B segment, as well as ii) higher other income.

• For tin can manufacturing segment, 1HFY24 PBT increased by 19.1% YoY to RM9.6mn, in tandem with an 18.4% YoY increase in revenue to RM62.8mn. The commendable result was underpinned by higher sales from the customers.

• On the other hand, F&B segment’s revenue for 1HFY24 grew by 15.4% YoY to RM15.4mn due to heightened demand. PBT increased to RM36.1mn, compared to RM16.3mn recorded in 1HFY23. Meanwhile, the PBT margin rose by 6.0%-pts to 12.6%.

• A second interim dividend of 2.0sen/share (2QFY23: 1.5sen/share) was declared during the quarter under review, bringing its YTD dividend to 4.0sen/share (1HFY23: 2.5sen/share).

Impact

• We make no changes to our earnings estimate at this juncture, pending an analyst briefing on a later date.

Outlook

• The demand for dairy products (such as sweetened condensed milk and evaporated milk) is expected to remain strong due to heightened tourist activity. Meanwhile, input costs (palm oil, skim milk, and whole milk powder) have remained relatively stable since January 2024. Given this stability in input costs, we anticipate a blended PBT margin of 12.0% for FY24 (vs. 10.7% in FY23 and 13.6% in 2QFY24), backed by improved demand and manageable input costs.

• On the other hand, management maintains a neutral-to-positive outlook for the tin manufacturing segment, attributing this to the ongoing market competitiveness.

Valuation

• Maintain Buy on AGB with an unchanged TP of RM2.57/share, based on SOP valuation.

Source: TA Research - 29 Aug 2024