KUALA LUMPUR (Jan 29): Power cables maker and distributor Master Tec Group Bhd made a flat debut on ACE Market of Bursa Malaysia on Monday, by opening at its initial public offering (IPO) price of 39 sen.
The opening volume for the stock was 11.36 million shares.
CEO of Master Tec Group Bhd, Tee Kok Hwa, said that the group aims to market new medium voltage (MV) power cables primarily to capital-intensive manufacturing industries.
"These include automotive plants, semiconductor fabrication plants, chemical plants, data centres, electric vehicle charging station facilities, renewable energy facilities, and manufacturing plants," he added.
Two research houses, Apex Securities Bhd and TA Securities, had initiated coverage of Master Tec.
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Apex Securities has assigned a fair value (FV) of 50 sen to the stock, representing a substantial 28.2% increase over the IPO price, on the back of 17 times financial year 2024 (FY2024) forecast price-to-earnings ratio (PER).
In contrast, TA Securities has ascribed a fair value of 40 sen to the stock, based on a 10 times FY2025 EPS forecast of four sen per share.
Master Tec aimed to raise a total of RM61.66 million from the IPO, with RM24.39 million or 39.55% of the proceeds allocated for the purchase of new machinery and equipment, and RM16.78 million (27.22%) designated for the construction of two new MV power cable manufacturing plants in Alor Gajah, Melaka.
Meanwhile, RM16.29 million (26.42%) is allocated for general working capital, followed by the remaining RM4.2 million (6.81%) for listing expenses.
Master Tec reported a profit after tax (PAT) of RM5.775 million in the individual third quarter ended Sept 30, 2023 (3QFY2023) and a PAT of RM19.407 million for the cumulative nine-month financial period ended Sept 30, 2023 (9MFY2023). This was mainly driven by better product mix and higher profit contribution from the sales of aluminium-cored wires and cables.
As of Nov 29, the group’s unbilled purchase orders value stood at RM48.52 million, and its balance of supply contract value stood at RM29.44 million.
The group is expected to recognise RM24.41 million by Dec 31, 2023, while the remaining balance is anticipated to be recognised by May 31, 2024.
It is worth noting that Master Tec held a market share of 3.57% in the Malaysian wires and cable manufacturing industry in 2022.
SJ Securities Sdn Bhd serves as the principal adviser, sponsor, underwriter, and placement agent for the IPO exercise.