ÿմ Airlines' contract to boost AGX profits by 6%-14% — Phillip Capital
KUALA LUMPUR (Feb 9): AGX Group Bhd (KL:) could see its profits rising 6%-14% over the next two years thanks to the logistics contract for aircraft parts secured last month, said an analyst.
The company could handle the contract from ÿմ Airlines with just a 10%-20% increase in headcount, demonstrating “the scalability of its operations with minimal incremental costs”, Phillip Capital said on Monday. By 2027, the job could provide about 11% of revenue to AGX, the research house noted.
AGX is expected to secure a substantial share of the logistics requirements of the national airline following its recent appointment, Phillip Capital said.
On Jan 21, AGX disclosed that it has been appointed to provide air and sea freight forwarding services and customs brokerage services for the shipment of aircraft parts and other goods to ÿմ Airlines for three years.
The company, which provides land, sea, and air logistics services, counts AirAsia as one of its major clients. The discount carrier accounts for about 17%-23% of its 2023-2024 revenue.
The vendor network of ÿմ Aviation Group, the parent company of ÿմ Airlines, includes roughly 1,000 parts suppliers, compared with 300 for AirAsia, “which requires greater coordination but also provides AGX with long-term operational stickiness”, Phillip Capital said.
While AirAsia’s share of AGX revenue is expected to decline from 17% in 2027, the shift reflects broader “diversification and incremental revenue streams, which we view positively as it enhances AGX’s revenue resilience and reduces customer concentration risk”, the research house said.
Phillip Capital maintained its “buy” call on AGX, raising its target price by five sen to 90 sen. “We expect earnings growth to accelerate” in 2026-2027, making its current valuations of about seven times its forward earnings multiple "attractive", the research house added.