Aurelius Technologies Berhad (Atech) is expected to see a strong 2Q24 as production volumes continue to rise from a low base in FY23, impacted by customer inventory rationalisation.

Into 2H24, ATech is progressively ramping up production for new orders, including automotive IoT modules, lift management systems, and new models from its existing customers. Significant growth is anticipated in the electronic devices segment, driven by an expanding customer base.

Maybank Investment Bank (Maybank IB) has raised their FY24E/FY25E/FY26E CNP forecasts by 3%/9%/6% for lower finance costs following recently completed private placement of new shares ad have also revised their capex assumptions based on the latest disclosure, resulting in lower depreciation costs.

Consequently, Maybank IB has tweaked their TP down to MYR4.02 from MYR4.06, using unchanged on an enlarged share base, while maintaining a BUY call on Atech.

Significant growth anticipated in electronic devices

P5 expansion is on track, said Maybank IB, targeting completion by end-2024. P5 will serve as the group's main automotive and IoT hub, with advanced manufacturing capabilities to support low-mix-high-volume production.

Key products include the tire pressure monitoring system (TPMS), IMD for EV/charging stations, and advanced POS devices. New customer orders are not included in the order book due to differences in lead times.

P5 ramp up rate a key growth driver ahead

While ATech remains on a 4-day work week, overall utilisation continues to improve (currently at >80%). It is in the midst of reviewing and increasing its headcount in preparation for higher production ahead.

Maybank IB remains optimistic about ATech's prospects, viewing it as a key beneficiary of supply chain diversification and local E&E FDIs. Maybank IB forecasts a 27% CAGR in CNP over the next three years, with only 20% utilisation of P5 by FY25E.

Higher utilisation for P5 could lead to even stronger growth.

Aurelius Technologies Berhad is a Malaysia-based investment holding company. The Company through its subsidiary, BCM Electronics Sdn. Bhd., is principally engaged in the provision of electronics manufacturing service (EMS) for industrial electronics products. It manufactures semiconductor components comprising multicomponent integrated circuit (IC) for Internet of Things (IoT) applications and mass production.

The Company offers a range of contract manufacturing services including engineering support services, prototyping, board assembly, mechanical assembly, testing, labelling, packaging and direct shipment fulfilment. It provides EMS for printed circuit board assembly (PCBA), subassemblies, box build, and system build products. It serves various industries, namely communication and IoT, multicomponent semiconductor module (IoT module), energy, power electronics and lightings.