AME Elite's presence in investment hotspots to lift results in FY26
According to a report by Philip Capital Research, the engineering and construction firm still has a presence in high-demand foreign-direct-investment hotspots Penang and Johor.
The research house noted would will continue to be a positive element despite a drop in AME Elite's revenue.
For FY25, its revenue fell 15% year-on-year to RM609mil on the back of weaker contributions from the property sector.
'Nevertheless, its earnings before interest, taxes, depreciation, and amortisation improved 5.2 percentage points to 25.1%, attributed to better progress milestones for construction and property development projects, cushioning core net profit decline to a marginal 2% to RM89mil,' the research house said.
Philip Capital Research noted that overall, the group's results came in below expectations, accounting for 54% of its full-year forecast and 52% of consensus forecasts.
'The result miss was primarily due to the timing of recognition for its RM210mil land sale to Digital Hyperspace (M) Sdn Bhd, which is expected to recognise a net gain of RM85mil, pending the final payment of the remaining 85% of the total consideration,' the research house noted.
However, the data centre client remains committed to the deal and has requested an extension for the final payment deadline to June with an optional extension to August.
Meanwhile, the research house also noted that AME Elite surpassed its FY25 target in terms of sales, which was supported by the launch of a industrial-park project in Penang.
The company's earnings for its third quarter ended Dec 31, 2024 saw its core net profit soar 77% quarter-on-quarter to RM33mil, attributed to margin improvement from its construction and property development, as well as the recognition of industrial property sales to AME Real Estate Investment Trust (AME-REIT).
In March, AME Elite announced that it was proposing to sell three industrial properties in Johor to AME-REIT for RM100.8mil in a related party transaction. The properties comprise one industrial property in i-Park @ Senai Airport City and two industrial properties in i-TechValley at Southern Industrial Logistic Clusters.
'AME Elite recorded RM640mil in new sales in FY25, surpassing its internal RM550mil sales target, including strong sales of RM55.9mil in the fourth quarter of FY25 from its newly launched RM1.3bil Northern TechValley in Penang,' the research house said.
It added that it raised its earnings forecast for AME Elite in FY26 by 78% to reflect the delay in the recognition of data centre land sale and faised FY27 earnings by 2% on housekeeping adjustments.
It also introduced its FY28 earnings forecasts which is a 4% increase year-on-year.
Philip Capital Research said it had trimmed its sum-of-parts-derived target price to RM2 from RM2.10 to reflect a higher forecast gearing level in FY26.
AME Elite declared a second interim dividend of three sen per share, down from four sen last year, bringing the total dividend for the year to six sen.
The dividend will be paid on July 4.
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