AGX: Growth Trajectory Fuels Optimism, Target Price Raised
| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
A leading logistics service provider is poised for sustained growth, underpinned by its robust strategic positioning and resilient operational framework. A recent corporate update highlighted the company’s strong fundamentals and clear earnings visibility, prompting a positive outlook from analysts.
Performance Highlights
The company’s earnings profile benefits significantly from its resilient intra-Asia trade exposure, particularly within Southeast Asia. Favorable regional macro conditions, including an accommodative interest rate environment and lower borrowing costs, are driving trade financing, inventory replenishment, and consumer demand, all of which bolster logistics volumes. The company operates an asset-light business model, focusing on logistics coordination rather than asset ownership, which, coupled with its cost pass-through pricing model and direct customer relationships, effectively protects margins amidst market fluctuations and inflationary pressures. Furthermore, a healthy balance sheet with low gearing and adequate liquidity provides ample flexibility for future expansion initiatives without undue strain.
Key Growth Drivers
Aerospace logistics continues to be a cornerstone of the company’s growth and margin expansion. Its 21-year track record and 24/7 control tower capabilities are key differentiators. The onboarding of new airline customers in Vietnam, along with the expansion of supported aircraft fleets, provides strong medium-term visibility for Maintenance, Repair & Overhaul (MRO) and Aircraft-on-Ground (AOG) related demand. Management anticipates aerospace logistics to account for approximately 50% of group revenue over time. The company is strategically focusing on key markets including Malaysia, Vietnam, Philippines, and Singapore. The favorable aviation recovery trends, anticipated surge in passenger traffic from Visit Malaysia Year 2026, and expanding international connectivity are expected to further fuel MRO and AOG demand, especially post-2026.
Analyst Outlook and Recommendation
TA SECURITIES maintains a BUY recommendation for the logistics provider, with a target price of RM0.25, representing a significant upside of 25.0% from the last traded price of RM0.20. This positive assessment is driven by the company’s solid operating fundamentals, effective strategic positioning within the Asia-Pacific region, and the strong tailwinds from regional aviation recovery and resilient trade flows. Analysts view the current valuation as compelling, given the company’s clear growth trajectory and robust operational strengths, which are expected to deliver further earnings.
