Broker: Maybank Investment Bank Berhad
Date of Report: June 1, 2025

Aurelius Technologies: Strong Start to FY25, Robust Growth Prospects, and Attractive Bonus Issue Proposal

Overview: Profit Beats Seasonal Trends, BUY Rating Maintained

Aurelius Technologies Bhd (ATECH) has kicked off FY25 with impressive results, signaling a positive growth trajectory for the year ahead. The company’s 1Q25 core earnings were in line with both internal forecasts and consensus estimates, and management has announced a bold move to improve stock liquidity via a 2-for-1 bonus issue and 1-for-1 free warrants. Maybank Investment Bank maintains its BUY rating with a target price (TP) of MYR3.73, pegged to a 21x PE multiple at +1.5SD above the sector’s 5-year forward mean. ATECH stands out as a top pick in the tech-EMS (Electronics Manufacturing Services) space, benefiting from trade diversion trends, a unique global client base, and strong growth drivers.

Key Highlights and Financial Performance

• Revenue Growth: 1Q25 revenue rose 18% year-on-year (YoY) to MYR147.9m, led by robust expansion in Communications & IoT (C&I) and Semiconductor Components (SC) segments. This growth was partially offset by a decline in Electronic Devices (ED).
• Gross Profit Margin (GPM): Slight dip of 0.8 percentage points YoY to 15%, affected by a weakening USD against the MYR, and higher labor and utility costs. However, GPM improved by 2.5 percentage points quarter-on-quarter (QoQ) to 15%, reflecting a margin recovery.
• Core Earnings: Core net profit climbed 26% YoY to MYR17.2m, making up 23% of Maybank’s and 24% of consensus full-year estimates. On a QoQ basis, core earnings increased by 9%.
• Orderbook Growth: The orderbook expanded 13% QoQ, reaching MYR495m.
• Dividend: A 3.6 sen dividend per share (DPS) was declared, representing a 34% payout ratio and aligning with expectations.

Bonus Issue and Free Warrants to Boost Liquidity

ATECH has announced a transformative proposal:

• Bonus Issue: Up to 867.5 million new shares (2-for-1 ratio).
• Free Warrants: 433.8 million free warrants (1-for-1 ratio), with an exercise price of MYR1.16 per unit.
• Ex-Date: 16 June 2025; Issue Date: 24 June 2025.

This move is expected to significantly enhance trading liquidity, and Maybank views this development positively for existing and new shareholders.

Positive Outlook: Sustained Growth Drivers

ATECH’s outlook remains robust, underpinned by:

• Strong order loadings from the Semiconductor Components segment.
• Trade diversion advantages and exposure to niche global clients.
• Post-bonus Target Price: The proforma TP post-bonus issue is MYR1.19, adjusted for the increased share base but retaining the same underlying valuation logic.

Management is maintaining FY25-27 forecasts, signaling confidence in sustained momentum.

Comprehensive Financials and Valuation Metrics

Below is a summary table of key financial metrics, capturing historicals, current, and projected performance:

Detailed Segment and Geographical Analysis

• Segment Performance (1Q25):
  • Communications & IoT Products: Revenue MYR124.6m, up 30.8% YoY, main growth engine (84.2% of total revenue).
  • Electronics Devices: Revenue MYR15.2m, down 39.0% YoY, now 10.3% of total revenue.
  • Semiconductor Components: Revenue MYR8.1m, up 46.2% YoY, contributing 5.4% of total revenue.
• Geographical Mix (1Q25):
  • Americas: 59.6% of revenue, up 39.2% YoY.
  • Malaysia: 22.5% of revenue, up 4.6% YoY.
  • APAC (ex-Malaysia): 11.9% of revenue, down 10.7% YoY.
  • Europe: 6.0% of revenue, down 18.5% YoY.

Profitability and Efficiency Metrics

• EBITDA Margin: Expected to improve to 16.0% in FY25E.
• Net Profit Margin: Projected to rise from 9.9% in FY23 to 11.1% in FY25.
• Return on Average Equity (ROAE): Strong, with improvement from 13.7% (FY23A) to 14.9% (FY25E), and further to 16.5% by FY27E.
• Cash Conversion Cycle: Efficient, averaging between 89 and 137 days.
• Dividend Payout: Rising trend, with payout ratios moving from 50% (FY23A) to 60% (FY25E-FY27E).

Valuation and Price Performance

• Current Price: MYR3.29
• 12-month Target Price: MYR3.73 (17% upside)
• 52-week High/Low: MYR3.78 / MYR2.72
• Market Cap: MYR1.4 billion (USD321 million)
• Issued Shares: 415 million
• 3M Avg Turnover: USD0.3m

Major Shareholders:

• Main Stream Holdings Sdn Bhd: 16.1%
• Main Stream Ltd: 17.6%
• EPF: 7.8%

Risk Factors and Sector Valuation Context

Potential risks for ATECH’s outlook include:

• Weaker-than-expected demand amid inflation and geopolitical risks
• Lower-than-expected cost pass-through due to client negotiations
• Operational disruptions (labour issues, component shortages)
• Adverse forex swings impacting margins
• Unfavorable trade policies (e.g., tariffs)

EMS Sector 5-Year Forward PE:

• Mean: 16.8x
• +1SD: 19.7x | +2SD: 22.7x | -1SD: 13.9x | -2SD: 11.0x

ATECH’s TP is set at 21x, at +1.5SD to sector mean, reflecting its premium positioning.

Conclusion: Investment Thesis Stands Out

Aurelius Technologies delivers on growth and operational execution, with benefits from industry trends such as trade diversion and rising semiconductor demand. The upcoming bonus issue and free warrants are expected to drive greater liquidity, while strong financials and a robust orderbook provide a foundation for further upside. With a BUY rating and 17% price upside, ATECH remains the leading EMS play for investors seeking exposure to Malaysia’s dynamic technology sector.

Historical Recommendation Timeline

A snapshot of Maybank’s recommendation and target price history for ATECH:

Contact Details for Further Information

For more details, reach out to Maybank Investment Bank Berhad, Kuala Lumpur, or any of its regional offices in Singapore, London, Hong Kong, Indonesia, India, Philippines, Thailand, and Vietnam.

Disclaimer

This article is based entirely on information and analysis provided by Maybank Investment Bank Berhad as of June 1, 2025. All investment decisions should consider personal financial circumstances, and investors are advised to seek professional advice before making any investment.