Able Global able to go higher on attractive valuations

Able Global Bhd saw resumption of buying interest after a month-long consolidation. The counter were trading at a 52-week high of RM2.23 in June from a low of RM1.24 last October.

It fell to RM1.71 early August but appears to have found support to climb in recent weeks. Over the past year, the counter surged 38.5% to close at RM1.98 on Aug 23.

Able Global, formerly Johore Tin Bhd, is a tin can manufacturing company that currently primarily serves the F&B industry. F&B segment has significantly contributed to the group’s performance, accounting for 82% of 1Q24 revenue and 80% of net profit. It exports its dairy goods comprising sweetened condensed milk, evaporated milk, and UHT full cream, as well as flavoured milk and milk powder.

Able Globe is actively expanding its presence in overseas markets leveraging its foothold in Mexico, which enhances logistical feasibility for neighbouring countries. The company exports largely to the American continent, the South-East Region, and West Africa. It also began expanding into Middle Eastern markets.

The company holds a competitive advantage due to its Halal certifications, which mitigate potential barriers compared to its competitors. Given the strong demand, the utilisation rate of its Mexican operations is forecast to reach 40% in FY24, up from 18% in 1QFY24.

The company has ventured into property segment. It has acquired 297.5 acres of land, with 89.3 acres allocated for manufacturing expansion and property development. The land approvals are in the final stage before construction commences.

The property development is estimated to have a gross development value of RM1.5 billion, to be executed in three phases. This new venture, as contributions from the property segment are expected to support the main revenue stream over the next 3 to 5 years.

Investors should be drawn to its attractive valuation compared to its peers.

Based on the current share price, Able Global’s FY24 price earnings (PE) multiple stands at a modest 10.5x, significantly lower than the average PER of 21.5x among its peers. This should be enough incentive for investors to have a stake in the company