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AGX: Strategic Partnership Bolsters Growth Prospects, Analyst Reiterates ‘BUY’ Rating
| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.85 (+44.1%) |
| Last Traded | RM0.59 |
| Recommendation |
A leading logistics provider has secured a significant three-year service contract with Malaysia Airlines Berhad (MAS), a move expected to expand its operational scope and contribute to future earnings. This strategic partnership has prompted analysts to reiterate a “BUY” rating on the company’s shares, with a revised target price.
Expanding Service Portfolio with Key Airline Contract
The new agreement, effective from December 2025 to November 2028, positions the logistics firm as MAS’ official freight partner. Previously involved only in Aircraft-on-Ground (AOG) services, the company will now provide comprehensive air freight forwarding, customs brokerage, and routine maintenance logistics for MAS’ fleet. This 24/7 service will cover the transport of critical aircraft components and other goods, with service charges based on mutually agreed rates and payments settled within 60 days of invoice issuance.
Significant Revenue Potential and Future Outlook
While no contract value was disclosed, the new partnership is anticipated to generate substantial revenue. Despite MAS operating a smaller fleet compared to other regional airlines, the complexity and frequency of MAS’ shipments involving larger aircraft and heavier components suggest comparable revenue potential. Analysts estimate that the revenue contribution from this MAS contract could be significant, drawing parallels to a regional peer whose 2025 revenue contribution was approximately RM50 million from similar services. Operational ramp-up is projected to take two to three months, with maiden earnings contribution expected from the second quarter of 2026.
Current earnings forecasts from the investment bank do not yet incorporate the potential upside from this new contract, indicating further room for positive revisions pending additional management guidance.
Analyst Reaffirms Positive Stance
Following the contract announcement, TA SECURITIES has maintained its “BUY” recommendation for the company, setting a target price of RM0.85. This target is based on a 12x price-to-earnings (PE) multiple on estimated 2026 earnings per share (EPS). The last traded price for the company’s shares was RM0.59, implying a total return potential of 44.1% to the target price. Key risks highlighted by the investment bank include a potential decline in freight demand, lower freight rates, and the possibility of customer loss.
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