The integrated electronic manufacturing service provider posted RM94.6 million in revenue in Q1 FY2023, down 31% quarter-on-quarter (q-o-q) and 6% year-on-year (y-o-y).
Net profit dropped 37.2% q-o-q to RM8.1 million in Q1 FY2023 from RM12.9 million in the previous quarter. Compared to the same period last year, however, it rose 60.8% from RM5 million in Q1 FY2022.
“Results were below expectations, achieving 15.7% and 13.5% of our full-year revenue and profit forecasts for FY2023 respectively.
“Revenue for the quarter was q-o-q weaker, arising from abrupt deferments from existing customers that were right-sizing inventory levels, re-emphasizing just-in-time (JIT), and facing recessionary effects,” said Mercury in a note on Monday.
Aurelius is a one-stop integrated electronic manufacturing service (EMS) provider, capable of offering an end-to-end EMS solution from concept to high-volume board assembly up to finished products.
Following the disappointing results, the research house has revised the group’s revenue and profit forecasts downward by 11.1% and 30.9%-35.6% due to weaker order book assumptions.
It has also downgraded Aurelius’ target price to RM2.72, down 23.4% from the previous target price of RM3.55 (March 28).
Despite the target price revision, Mercury remains optimistic of the company’s prospects due to its “attractive expansion plans, customer portfolio diversification from a high-mix-low-volume to medium-mix-medium-volume business, and solid track record”.
On Jan 13, Aurelius had agreed to purchase a 301,874 sq ft vacant land located within the Kulim High-Tech Park from Northern Technocity Sdn Bhd. It plans to build a manufacturing plant to address the constraint in its manufacturing floor space.
“The plant is intended to undertake manufacturing activities for multiple customers of the company and have the capacity to fit at least 15 SMT (surface-mount technology) lines (compared to 17 SMT lines of the current 260,357 sq ft plants 1,2, and 3),” noted Mercury.
The research house also highlighted the company’s strong order book and its plans to automate its production lines, which should improve the group’s productivity and lower labour costs.
As at 12.28pm, Aurelius’ share price was down 3 sen or 1.26% at RM2.35, giving it a market capitalisation of RM925.9 million.