PETALING JAYA: After facing disruptions in business due to Covid-19 restrictions, Able Global Bhd (AGB) is back on the growth track.
According to TA Research, the group’s Malaysian plant has resumed operations in full workforce in September from around 60% previously, putting it in a better position to sustainably increase production and deliveries.
It sees a stronger fourth quarter of financial year 2021 (FY21) for the company.
“Meanwhile, its sales visibility remains healthy amid some shifts between the exported countries,” the research firm said in a report following a virtual analyst briefing with AGB.
For example, it said that the group has increased shipment to regions that are reopening economic activities such as Indonesia, the Philippines and Africa to offset sales weakness in countries that have been affected by lockdown such as Vietnam.
The group, previously known as Johore Tin Bhd, is also ramping up its Mexican plant’s condensed milk lines.
The Mexican plant started in July 2021 and has seen strong incoming orders from customers.
According to TA, management expects the condensed milk lines to achieve breakeven by October as utilisation rate reaches about 30%.
“Meanwhile, one evaporated milk line was made operational recently with the second line under commissioning and is expected to be ready by the fourth quarter of FY21.
“With all the lines estimated to be fully installed by end-FY21, the management aims to drive overall Mexican plant’s utilisation rate to 30%-50% within the first year of operation and over 60% in the second year of operation,” said TA.
The plant would primarily focus on selling to Mexico itself alongside exports to the surrounding American regions such as Caribbean Island, Haiti, the United States and South American regions.
The favourable duty structure, coupled with better sourcing and logistic arrangements, are expected to enable the group to competitively penetrate into targeted markets, it added.
Besides food and beverage (F&B), AGB is also involved in the manufacturing of various tins, cans and other containers.
In June this year, it bought 297.51 acres of freehold land in Kuala Langat, Selangor, to expand its manufacturing operations as well as undertake industrial property development activities.
The land acquisition in Banting for RM169.8mil alongside the group’s proposed diversification into property development require shareholders’ approval at an EGM, which is expected to take place later this month.
TA noted that there is no gross development value guidance at this point pending completion of acquisition, sub-division and land conversion.
“Nonetheless, AGB highlighted that the needs for warehousing and manufacturing would underpin continuous demand for industrial properties.
“Separately, we note that the acquisition price of the Banting land at RM13.10 per sq ft is considerably cheaper versus Scientex Bhd’s recent proposed land acquisition in Jenjarom, which is about 10km away and is priced at RM19 per sq ft.”
TA maintains a “buy” on the stock with an unchanged target price of RM2.30, based on 15 times price-earnings ratio (PER) on F&B earnings and eight times PER on tin manufacturing earnings for 2022.
For the second quarter ended June 30, 2021, AGB made a net profit of RM11.41mil on a revenue of RM120.52mil.
For the six-month period, net profit stood at RM20.9mil while revenue was at RM234.34mil.