Aurelius Technologies Bhd (ATECH) has made significant strides in its Environmental, Social, and Governance (ESG) initiatives, as reflected in its updated ESG score of 63 out of 100, according to Maybank Investment Bank Bhd (Maybank IB). This score marks a substantial increase from the previous rating of 41 and positions the company as above average in terms of its sustainability practices.
Maybank IB has maintained its BUY recommendation and target price of RM4.02, which is based on a 23 times price earnings ratio for the company's estimated earnings for calendar year 2025.
The improvements in ATECH's sustainability reporting are noteworthy, especially following the release of its FY23 Annual and Corporate Governance Reports. The company has expanded its disclosures to include Scope 1 emissions and water consumption, demonstrating a commitment to transparency.
Key achievements include a reduction in carbon emissions, decreased electricity and water usage, and a significant drop in employee turnover, now at 2%, down from 4-5% in prior years. ATECH has also increased its corporate social responsibility activities and improved the percentage of profits returned to shareholders.
While ATECH has made commendable progress, there remain areas for enhancement. The company is encouraged to focus on better reporting of Scope 3 emissions and waste disposal practices. Additionally, increasing local sourcing and striving to maintain a minimum of 30% female representation on its Board, as recommended by the Malaysian Code on Corporate Governance (MCCG), would align with best practices. Enhancing women's participation in management, currently at 11.8%, and developing a detailed roadmap to track progress towards net-zero emissions would also be beneficial.
ATECH has taken significant steps in its sustainability framework, transitioning from "EES" to "EESG." This restructure includes a Sustainability Working Team divided into two groups: one focused on plan implementation and the other on executing initiatives and data gathering.
The company has committed to achieving net-zero emissions by 2050 and supports the 30×30 goal to protect 30% of nature by 2030. Further demonstrating its commitment to sustainability, ATECH has installed rooftop solar systems generating up to 2.5783 MWp, which is expected to result in annual savings of RM1.5 million in electricity costs.
Currently, ATECH's share price stands at RM2.95, with a 12-month target price indicating a potential upside of 39%. The company has a market capitalisation of RM1.2 billion (approximately US$267 million) and remains well-positioned in the manufacturing solutions sector for industrial electronic products. Major shareholders include Main Stream Holdings Sdn Bhd, Main Stream Ltd, and the Employees Provident Fund (EPF).
