ABLEGLOB: Enhanced Cost Efficiency and Strategic Contributions Propel Earnings Beat, Target Price Raised
| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
Performance Review
Able Global Berhad reported a robust financial performance for the third quarter of fiscal year 2025 (3QFY25), with net profit climbing 10.4% year-on-year to RM19.6 million. This strong showing surpassed both PublicInvest Research’s and market consensus expectations for the full fiscal year 2025 and 2026 by 22.3% and 19.9% respectively. Despite a slight dip in core net profit by 1.4% YoY to RM21.6 million for the quarter, year-to-date (YTD) FY25 core net profit stood at RM54.5 million, representing 75.8% of the full-year estimate.
Strategic Drivers and Challenges
The Group’s impressive earnings were primarily attributed to a stronger-than-expected contribution from its Mexico Joint Venture, which delivered higher profits than anticipated. Furthermore, a notable RM2.5 million contribution from associate profit significantly bolstered the 3QFY25 results. Strategic cost efficiencies, largely driven by lower raw material costs, and a favourable product mix also played a crucial role in enhancing overall profitability.
Despite these positive developments, Able Global faced some operational headwinds during the quarter. Both the Tin manufacturing and Food & Beverages (F&B) segments experienced lower revenue year-on-year. The Group also contended with softer utilization rates, particularly at its Teluk Panglima Garang operations, where longer processing times for some products impacted overall production. Unfavourable foreign exchange movements further compounded these challenges.
Outlook and Recommendation
Looking ahead, Able Global is poised for stronger sequential earnings, underpinned by the resilient demand for its dairy products and the inherently defensive nature of its consumer staple portfolio. The Group anticipates sustained high demand in Southeast Asia. Management expects earnings to be further supported by continued lower input costs for key raw materials such as sugar, crude palm oil, and tin, alongside an improved product mix. The Mexico JV is also expected to improve its performance driven by demand recovery, contributing positively to the Group’s bottom line. PublicInvest Research has reiterated its “BUY” recommendation for Able Global, raising its target price to RM0.25, reflecting a 25.0% upside from the last traded price of RM0.20.
