KUALA LUMPUR (March 25): Apex Securities Bhd has recommended investors “subscribe” to soon-to-be-listed SBH Marine Holdings Bhd, with a target price (TP) of 25 sen.
The research house said that at an initial public offering (IPO) price of 22 sen, SBH’s forward price-earnings (PE) valuation for the financial year 2024 (FY2024) is projected at 11.3 times based on its estimated FY2024 forecast earnings per share (EPS) of 1.9 sen, while FY2025 PE valuation is projected at 8.5 times based on its estimated FY2025 forecast EPS of 2.6 sen.
In an IPO note on Monday, the research house said it arrived at the fair value of 25 sen (15% potential upside from its IPO price) by assigning a target PE of 9.6 times to its FY2025 forecast EPS.
“We rolled forward our earnings forecast to FY2025F as we opined that most of SBH's earnings growth will be more accurately reflected in that specific financial year.
“The assigned target PE represents approximately 15% premium to selected peers that are involved in the frozen seafood industry such as MAGH (MAG Holdings Bhd) and PTRB (PT Resources Holdings Bhd) that are trading at an average one-year trailing PE of 8.4x.
“The premium to selected peers is justifiable, premised on SBH strong earnings growth prospect which is expected to come into play in the coming years,” it said.
Apex said it is optimistic about SBH's strategic initiative to integrate its entire supply chain, from hatchery to merchant trading.
“This comprehensive approach allows SBH to closely monitor its product sources and capture margins across the supply chain more effectively.
“Furthermore, the group is actively exploring opportunities in the Chinese market through the Frozen Seafood Expo, which, if successful, could create additional revenue streams for SBH,” it said.