AGX: Strategic Expansion Fuels Positive Outlook, Target Price Reaffirmed
| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
A leading aerospace logistics provider is set for significant growth, largely driven by its strategic penetration into the burgeoning Vietnamese market. The company has secured key service agreements that are expected to solidify its regional presence and contribute substantially to future revenue, according to a recent investment bank report. This positive outlook has led to a reaffirmation of a BUY rating and a robust target price.
Deepening Presence in Vietnam
The company has notably entered a 2-year Freight Forwarding and Customs Brokerage Services Agreement with VietJet Aviation, effective from November 2025 to October 2026. This landmark contract, which includes 24-hour, 7-day logistics support and Aircraft-on-Ground (AOG) services for VietJet’s fleet, marks the company’s first direct engagement with the airline. This follows a recent service agreement with Sun Phu Quoc Airways, further cementing its growing foothold in Vietnam’s aviation ecosystem.
With Sun Phu Quoc planning to expand its fleet to 35 aircraft over the next two years, the demand for logistics services is set to soar. Vietnam is projected to become the company’s third-largest revenue contributor, trailing only Malaysia and the Philippines. This strategic entry is expected to strengthen regional network synergy, enabling the group to capitalize on increasing cross-border MRO and AOG logistics flows across Southeast Asia.
Investment Outlook and Risks
Analysts maintain a positive outlook on the company, acknowledging that current earnings forecasts have yet to fully incorporate the potential upside from the Vietnamese market. The BUY rating and a target price of RM0.85 are reiterated, based on a target 12x Price-to-Earnings (PE) multiple on 2026E EPS. This valuation underscores confidence in the company’s growth trajectory and market expansion.
However, the investment call is subject to several key risks. These include the potential for lower-than-expected freight demand, a decline in global freight rates, and the risk of customer attrition. Investors will be closely watching how these factors unfold as the company continues its expansion efforts.
