KUALA LUMPUR (March 13): Hong Leong Investment Bank (HLIB) has valued ACE Market-bound Zantat Holdings Bhd at 36 sen based on a 12x price earnings ratio on FY2024F earnings per share of three sen.

In a note on Wednesday, HLIB said given that a significant portion of its sales in India is derived from the plastic industry, Zantat serves as a proxy for the growing demand for plastic in the region.

“With circa 43% of its sales attributed to India's plastic industry, Zantat is strategically positioned to capitalize on the escalating demand for plastics within the region.

“According to the All India Plastics Manufacturers Association (AIPMA), the Indian plastic industry is forecasted to experience exponential growth, with market size expected to triple from INR3.50 lakh crore or US$42.2 billion (RM197.4 billion) in 2022-23 to INR10 lakh crore or US$120 billion in 2027-28,” it said.

HLIB said this surge will be fuelled by both domestic and export markets, driven by factors such as rapid population growth, rising income levels and increased global recognition of Indian products.

“We project Zantat’s core PAT to register a strong FY22-FY25F CAGR of 18.4%, underpinned by supported by (i) stronger GCC sales in the Indian market; (ii) the commencement of a new GCC line; and (iii) the burgeoning sales from ultra-fine ground calcium carbonate and biodegradable compound,” it said.