AGX earnings to be supported by aerospace logistics recovery
'We are positive on its long-term potential underpinned by a scalable asset-light model that enhances financial agility, niche strength in aerospace logistics and its positioning to tap into rising cross-border eCommerce and maintenance, repair, and overhaul demand,' it added.
AGX is a regional third-party logistics provider with operations across nine countries, specialising in sea and air freight forwarding, aerospace logistics, and warehousing.
'We project core net profit compounded annual growth rate of 28% for financial year 2024 (FY24) to FY26, supported by aerospace logistics recovery and stable freight volumes.
'FY25 to FY27 top line is forecast to grow about 10% annually, while margins normalise at 28% gross and 12% earnings before interest tax depreciation and amortisation.
'The balance sheet remains robust, with estimated capital expenditure of only about RM1mil per year,' it said.
Mercury Securities is initiating its 'hold' stance on the stock with a target price (TP) of 54 sen.
Its TP is based on 13.5 times FY26 earnings per share, a modest 10% premium to the local logistics sector price to earnings ratio average, justified by AGX's strong earnings trajectory and strategic niche.
'Global trade headwinds and aerospace concentration risks temper near-term upside. Key risks include changes in local and internal regulations, decline in demand for sea and freight changes, fluctuations in sea and freight rates and dependence on a major local carrier,' it noted.
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