Aurelius Technologies to see earnings growth in three years, driven by demand for semiconductor components

Aurelius Technologies to see earnings growth in three years, driven by demand for semiconductor components

Aurelius Technologies' order book as of November 1, 2021, stood at RM482.7 million and is expected to be delivered from November 2021 to November 2023.

KUALA LUMPUR: Aurelius Technologies Bhd's (ATech) revenue and net profit are expected to grow at a three-year compound annual growth rate (CAGR) of 5.8 per cent and 33.7 per cent respectively, from the financial year 2021 (FY21) to FY24 to RM429 million and RM37.6 million.

TA Securities Holdings Bhd said this is premised on sales growth assumption for FY21, FY22 and FY23 of 2.5 per cent, 7.5 per cent and 7.5 per cent.

"We anticipate growth to be driven by the company's key segments including communications and Internet of Things (IoT) products, electronic devices, and semiconductor components on the back of economic recovery and growing demand for communications and IoT products amid the global digital transformation.

"Furthermore, we also foresee an upside to ATech's profitability alongside increasing contributions from Customer F for the manufacturing of semiconductor components (IoT modules).

"We believe margins in this newer area will be higher as the processes are higher up the value chain," the firm said in a note today.

TA Securities forecast ATech's overall net margins about doubling from 4.3 per cent in FY21 towards 8.8 per cent by FY24.

Also providing near-term visibility, TA Securities said ATech's order book as of November 1, 2021, stood at RM482.7 million.

The order book is expected to be delivered from November 2021 to November 2023.

TA Securities has initiated its coverage on ATech with a target price of RM1.73.

The research firm said at the initial public offering (IPO) price of RM1.36 per share, ATech is priced at a trailing price-to-earnings (PE) of 31.0x against its financial year 2021 (FY21) earnings per share (EPS).

"We opine that the assigned PE multiple is justified by ATech's double-digit earnings growth prospects on the back of its expansion plans to capitalise on growth from communications and IoT amid global digital transformation and latent prospects from its upcoming lithium-ion battery pack system.

"For reference, its peers on the local bourse, including VS Industry Bhd, SKP Resources Bhd, and PIE Industrial Bhd, trade in the range of 16-20x against 2022 EPS," it said.

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https://www.nst.com.my/business/2021/12/750552/aurelius-technologies-see-earnings-growth-three-years-driven-demand