KUALA LUMPUR (Nov 26): JF Apex Research has maintained its “buy” rating on AME Elite Consortium Bhd with a higher target price of RM2.53 (from RM2.21) after rolling over its valuation to FY22F, ascribing PE multiple of 16.5x which is in line with current valuations of other large-cap construction players.
In a note today, the research house said it likes the stock for its: 1) potential landbanking in Klang Valley, 2) potential listing of industrial REIT in the immediate term; and 3) unique busines model which is relatively unfazed by prevailing pandemic and economic downturn.
JF Apex said AME posted a core net profit of RM11.4 million for its 2QFY21 result, tumbling 27.8% year-on-year (y-o-y) but rebounding strongly by 115.1% quarter-on-quarter.
“1HFY21 below expectations. The Group chalked up RM16.7 million core net profit for its 1HFY21 result (-42.2% yoy) which accounts for 26-27% of our in-house and street estimates.
“The lower-than-expected result was mainly due to lukewarm performances posted by its Construction and Engineering Divisions,” it said.
On the earnings outlook, JF Apex said it slashed FY21F and FY22F core net earnings by 18.8% and 22.1% to RM51.9 million and RM65.6 million respectively after lowering its target orderbook assumptions, progress billings and profit margins for the Construction and Engineering Divisions.