Aurelius Technologies (ATECH) has reported a robust second quarter for FY24, with a core net profit (CNP) of RM30.1 million for the first half of 2024, aligning with expectations and accounting for 48% of both the company's and consensus full-year estimates.

Maybank Stock Broking House have maintained a BUY call on the stock, with a target price of RM4.02 based on a 23x CY25E price-to-earnings ratio. The positive outlook is supported by ATech's strong technical capabilities and its strategic positioning as a beneficiary of supply chain diversification, particularly in the Internet of Things (IoT) and automotive sectors. The new P5 capacity, currently 30% complete, is anticipated to further capture market demand upon its expected completion next year.

The first half of 2024 saw a 43% year-on-year increase in CNP, driven by a significant 37% rise in revenue, bolstered by a stronger order book. The growth was led by the Commercial and Industrial (C&I) segment, which increased by 33%, and the Electronic Devices (ED) segment, which surged by 82%. Despite these gains, the Semiconductor (SC) segment experienced an 8% decline in sales. The gross profit margin improved by 4.5 percentage points to 15.7%, thanks to enhanced operational efficiencies, although this improvement was somewhat tempered by a higher tax rate, which increased by 9.2 percentage points to 24.5%. This strong performance occurred despite the company operating on a four-day work week.

On a quarter-on-quarter basis, the core net profit for 2Q24 rose by 21%, reflecting robust demand from the C&I segment. This growth was achieved despite margin pressures due to forex fluctuations and a challenging product mix. Although ED sales, which are higher-margin, declined by 11% quarter-on-quarter, this was offset by a 29% increase in C&I sales. The SC segment also showed improvement from its trough in 4QCY23, with better performance anticipated as utilization rates increase. The SC segment remains the highest-margin division.

Source: Maybank
Title: Robust quarter