AME Elite to expand industrial development

Its i-Parks with full-fledged services have attracted multinationals’ interest since the US-China trade tensions flared up, says AME Elite MD


AME Elite Consortium Bhd plans to push the development of industrial parks as global manufacturers seek new operation bases which are exempted from higher tariff as the US-China trade war prolongs.

The company, which was listed on the local bourse yesterday, would use the proceeds from its listing exercise to develop its complete and integrated i-Parks in Johor and replicate the model across Peninsular Malaysia.

AME Elite MD Kelvin Lee Chai said its i-Parks with full-fledged services including workers’ accommodation and recreational facilities had attracted multinationals’ interest since the US-China trade tensions flared up.

“We have set in motion plans to expand the i-Park@ Senai Airport City development from 112 acres ( 45.3ha) currently to approximately 189 acres with the recent acquisition of a parcel of land for Phase 3. We are hopeful of expanding our dormitories’ facilities to cater to the requirements of multinational and local companies.

“This will also increase our recurring income stream in the future,” he said after the company’s listing on the Main Market of Bursa Malaysia Securities Bhd in Kuala Lumpur yesterday.

AME Elite started its maiden trading day at RM1.28 from its offer price of RM1.30. Strong interest pushed the stock 20 sen higher to RM1.50 at 10.26am.

AME Elite chairperson Tengku Azrina Raja Abdul Aziz said the group is committed to expanding its industrial park business model into other states in Peninsular Malaysia.

She said to do so, the company will acquire parcels of land and form potential joint ventures for future property development.

Meanwhile, Kelvin said the company is looking at Selangor and Penang for such expansion plans. “However, no decision has been made. We are still looking for the ideal locations, good connectivity and of course, not too pricey. Hopefully, by year-end we should have something,” he said.

AME Elite ED Simon Lee said the group hopes to achieve a double-digit growth for the remaining financial year 2020.

“We expect to increase our revenues and subsequently the profit. It is something we are working on. Once we have an increase in revenues and profit, eventually it will reflect in the share price. That is something that we look forward to.

“It will depend on when we get the land banks and when we sign the deals with the customers. But we are optimistic,” he said.

AME Elite posted a 96% jump in net profit attributable to shareholders to RM13.1 million in the first quarter ended June 30, 2019 (1Q20) from RM6.7 million a year ago, boosted by a 60.8% increase in revenue to RM94.4 million from RM58.7 million previously.

The group’s strong 1Q20 performance was largely due to the higher demand of industrial properties, investments in the manufacturing sector and the ongoing US-China trade war. The company also plans to pay dividends to shareholders.

AME Elite’s listing entailed the public issue of 85.4 million new shares at an issue price of RM1.30 per share, representing 20% of the group’s enlarged share base of 427.2 million shares.

The company raised RM166.6 million from its initial public offering (IPO). AME Elite plans to use RM111.1 million to expand its business, including future industrial property developments and projects.

It will also use the money as the working capital for the i-Park@Senai Airport City development and to complete the expansion of the group’s precast concrete fabrication capacity.

The investment bank said AME Elite stands to benefit from rising demand for industrial properties in Malaysia due to trade diversion amid the ongoing US-China trade war.

“We initiate coverage on AME Elite with a ‘Buy’ call and target price of RM1.83 based on 30% discount to realisable net assets value.

“We like AME Elite for its niche gated and guarded industrial park development projects, a total solutions provider for local and multinational companies to build manufacturing plants and logistics warehouses and its value engineering expertise to reduce construction cost,” it said.