PETALING JAYA: After facing business disruption due to Covid-19 restrictions, Able Global Bhd (AGB) is back on track for growth.
According to TA Research, the group’s Malaysian plant resumed full operations in September from around 60% previously, which puts it in a better position to sustainably increase production and deliveries.
He forecasts a stronger fourth quarter of fiscal 2021 (FY21) for the company.
“In the meantime, its sales visibility remains healthy amid some lags between exporting countries,” the research firm said in a report following a virtual analyst briefing with AGB.
For example, he said the group had increased its shipments to regions that are reopening economic activities such as Indonesia, the Philippines and Africa to make up for weak sales in countries that have been hit by the lockdown such as Vietnam.
The Mexican plant started up in July 2021 and has recorded strong customer orders.
Management expects condensed milk lines to break even by October, according to TA, with the utilization rate reaching around 30%.
“Meanwhile, an evaporated milk line was recently commissioned with the second line being commissioned and is expected to be ready by the fourth quarter of fiscal 21.
“With all lines estimated to be fully installed by the end of FY21, management aims to increase the overall utilization rate of the Mexican plant to 30% to 50% in the first year of operation and over 60% in the second year of operation, ”TA said.
The factory would primarily focus on sales to Mexico itself as well as exports to surrounding US regions such as the Caribbean Island, Haiti, the United States, and parts of South America.
The favorable tariff structure, combined with better supply and logistics arrangements, should allow the group to competitively penetrate target markets, he added.
Besides food and beverage (F&B), AGB is also involved in the manufacture of various cans, cans and other containers.
In June of this year, it purchased 297.51 acres of freehold land in Kuala Langat, Selangor, to expand its manufacturing operations and undertake industrial property development activities.
The acquisition of land in Banting for RM 169.8 million as well as the group’s proposed diversification into real estate development require shareholder approval at an EGM, which is expected to take place later this month.
TA noted that there is no indication of gross development value at this stage pending completion of land acquisition, subdivision and conversion.
“Nonetheless, AGB stressed that the warehousing and manufacturing needs would support the continued demand for industrial properties.
“Separately, we note that the purchase price of the Banting land at RM 13.10 per square foot is considerably cheaper than Scientex Bhdthe recent acquisition of land proposed by Jenjarom, approximately 10 km away and priced at RM19 per square foot.
TA maintains a “buy” on the stock with an unchanged target price of RM 2.30, based on 15 times the price-to-earnings ratio (PER) on F&B earnings and eight times the PER on manufacturing earnings. pewter for 2022.
For the second quarter ended June 30, 2021, AGB achieved net profit of RM 11.41 million on revenue of RM 120.52 million.
For the six-month period, the net profit was RM20.9 million while the revenue was RM 234.34 million.