ATech’s new plant a positive development

PETALING JAYA: Apex Securities Bhd has reiterated its “buy” recommendation on Aurelius Technologies Bhd (ATech) with an unchanged target price of RM3.22 following the group’s commitment to factor in future growth through its newly purchased plant.

In a note, the research house said ATech had signed a letter of offer to purchase industrial land in the Kulim High-Tech Park from Northern Technocity Sdn Bhd for RM12.2mil in cash.

The land is six km from its current operating plant.

The multicomponent semiconductor provider plans to construct a manufacturing plant which is set to become the main automotive manufacturing hub.

Apex Securities said this showed ATech’s readiness from management to prepare for growth by expanding its communication, Internet-of-Things devices, semiconductor components and automotive component business.

“Anticipating the need for additional manufacturing space in the next three to five years, the proposed acquisition was aimed at facilitating the construction of an adjoining expansion of the new plant,” it said.

The land is targeted to be handed over this month while the plant is expected to be ready by the end of this year, according to the company.

“The planning of the plant development is being finalised with an estimated approximate gross floor area of 250,000 sq ft of integrated manufacturing, warehouse and office space, including 50,000 sq ft of ISO 8 clean room facilities.

“The construction cost is estimated to be RM65mil,” it said.

ATech planned to finance 90%, which is RM11mil, through bank borrowings. This will result in an increase of RM300,000 in its annual finance costs.

Apex Securities said it would make no changes to its earnings forecasts due to a lack of clarity on the project timeline.