KUALA LUMPUR (March 22): TA Securities has valued ACE Market-bound frozen seafood firm SBH Marine Holdings Bhd at 24 sen, and said at the initial public offering (IPO) price of 22 sen, SBH is priced at a trailing price-earnings ratio of 15 times its earnings per share for the financial year ended Dec 31, 2023.
In a note on Friday, the research house, which does not have a rating for the stock, said the valuations had taken into consideration the group’s plan to expand its regional presence and growing global population.
“In addition, we have also factored in SBH’s plans to expand its aquaculture shrimp farming and seafood processing plant, which will enhance profit margins and reduce dependence on third-party suppliers.
On the outlook for the company, TA Securities said based on independent market research conducted by Protégé and published in the IPO prospectus, the export value of frozen seafood in Malaysia was valued at RM2.2 billion in 2023 (-1% year-on-year) due to weaker demand.
“However, export value is expected to grow by 5.5% to RM2.3 billion in 2024, driven by an increase in health awareness leading to a shift away from canned food to frozen seafood.
“All in, Protégé anticipates a five-year compound annual growth rate of 5.2% from 2023 to 2027 (from RM2.2 billion in 2022 to RM2.9 billion in 2027). Future growth of the export value of frozen seafood is attributed to various catalysts, including: i) an increase in consumption due to growth in global and Malaysian populations; ii) Shifting preference from canned food to frozen seafood containing better protein and essential nutrients; and iii) convenience of frozen seafood,” it said.
The research house expects the company's FY2023 earnings to be flattish, due to slower demand in Europe and the Middle East region.
It said the slowdown is attributable to political uncertainties in the Middle East, and the conflict between Russia and Ukraine, which have dampened consumer sentiment in Europe.
“Thereafter, we anticipate the group to record earnings growth of 12% to RM14.5 million for FY2024, and 21% to RM17.4 million for FY2025.
“Growth will be supported by an increase in demand from existing customers, and efforts to secure potential new customers through participation in overseas exhibitions and trade shows,” the house said.