Review

• Able Global Berhad’s (AGB) 9MFY24 core earnings of RM47.6mn were in line with expectations at 78% of our full-year forecast and 74% of the consensus estimate.

• 3QFY24 revenue rose 9.7% YoY to RM193.9mn, thanks to higher demand from its F&B segment. However, core earnings declined by 16.4% YoY to RM13.6mn after adjusting for one-off items. This decline was primarily due to increased tax expenses of RM6.3mn (+33.9% YoY) and higher losses of RM0.9mn from its associate, compared to a loss of RM0.8mn in 3QFY23.

• Cumulatively, 9MFY24 revenue increased by 13.6% YoY to RM544.4mn, thanks to higher demand in both the F&B and tin can manufacturing segments. Meanwhile, core earnings surged 47.4% YoY to RM47.6mn, attributed to the strong performance of its F&B segment.

• F&B segment’s revenue for 9MFY24 increased by 15.4% YoY to RM452.5mn driven by higher sales demand from its customers. As a result of the increased turnover, PBT surged by 88.0% YoY to RM60.6mn. Consequently, the segment's PBT margin expanded by 5.2%-pts to 13.4%.

• For the tin can manufacturing segment, 9MFY24 revenue improved by 5.7% YoY to RM91.9mn, primarily due to higher demand. However, segmental PBT declined by 25.2% YoY to RM10.1mn, mainly attributed to foreign exchange losses. Sequentially, 3QFY24 segmental revenue fell by 14.2% QoQ to RM29.0mn, due to lower demand reported in this quarter. Following the decline in sales, segmental PBT dropped 91.6% YoY to RM0.5mn.

• A third interim dividend of 2.0sen/share (3QFY23: 2.0sen/share) was declared during the quarter under review, bringing its YTD dividend to 6.0sen/share (9MFY23: 4.5sen/share).

Impact

• No change to our earnings estimates.

Outlook

• The tin can manufacturing segment remains competitive. Looking ahead, the group is focused on securing new customers to enhance its topline performance.

• For its F&B operations in Malaysia, the evaporated milk production line reached 99% of its total capacity of 5,000 tonnes as of 1HFY24. As a result, the group is undertaking machine upgrades and maintenance to improve operational efficiency. Management projects an increase of approximately 5%-9% in overall capacity, with an additional capacity of 6,550 tonnes to 11,790 tonnes (current total capacity: 131,000 tonnes).

Valuation

• We reiterate our Buy recommendation on AGB with an unchanged TP of RM2.57/share, based on SOP valuation.

Source: TA Research - 28 Nov 2024