Aurelius Technologies: 1QFY26 Earnings Miss Forecasts, Outlook Hinges on Mid-Year Recovery

KUALA LUMPUR, June 3 – Aurelius Technologies (ATECH) reported 1QFY26 core earnings of RM8.2 million, down sharply by 46% year-on-year and 56% quarter-on-quarter, representing just 11% of full-year forecasts of RM73.2 million. The shortfall was attributed to USD/MYR weakness, selective supply chain disruptions involving gold and memory components, and gross margin compression to 12.0% from 15.6% in 4QFY25.

Management flagged a more measured recovery, with meaningful improvement expected only after mid-year. Gross profit margins are likely to remain pressured by operational cost headwinds, including rising component costs and human capital expenses, though order replenishment is anticipated to improve from 2QFY26. Importantly, no material rescheduling or cancellation of existing orders has been reported.

Sequentially, revenue and core PATAMI fell 20.9% and 56.3% from the strong 4QFY25 base, reflecting seasonality and fewer effective working days due to festive periods. Year-on-year, revenue dropped 11.8% to RM130.4 million, with declines across legacy segments: Communication & IoT (-9.6%), Electronics devices (-41%), and Semiconductor components (-34.9%). The newly-disclosed automotive segment contributed maiden revenue of RM3.6 million, signalling diversification.

Aurelius Technologies

Net margin compressed to 6.3% from 10.3% a year earlier, driven by FX translation drag, difficulty passing through cost inflation, and rising labour costs amid regional talent competition. Geographically, the Americas remained the largest market at RM83.0 million (-5.8% YoY), while Asia-Pacific ex-Malaysia and Europe saw sharper declines.

Despite weaker earnings, operating cash flow surged to RM30.4 million on working capital release, with receivables and inventories easing. ATECH ended the quarter debt-free, holding RM200.1 million in cash and short-term investments, equivalent to RM0.15 per share. Interim dividend was declared at 0.65 sen, payable July 7.

Looking ahead, management expects modest improvement in 2QFY26, stable performance in 3QFY26, and a meaningful step-up in 4QFY26 driven by new product introductions, automotive ramp-up, and year-end customer budget execution. Precision plastics expansion is also progressing, with construction slated for late 4QFY26.

Earnings forecasts have been cut by 22% for FY26F and 16% for FY27F to RM57.0 million and RM67.6 million respectively, with a new FY28F forecast of RM73.7 million. Valuation remains attractive, with BUY maintained but target price lowered to RM0.87 from RM1.00, based on rolled-forward FY27F EPS of 4.8 sen. At RM0.79, the stock trades at 19.8x FY26F and 16.5x FY27F core PE.

Analysts highlight ATECH’s commendable margin profile versus peers, strong net cash position supporting dividends, and optionality from automotive ramp and upstream diversification. Near-term visibility remains constrained, but catalysts include sequential improvement in 2QFY26, NPI commercialisation, and precision plastics construction commencement.

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