KUALA LUMPUR (May 10): TA Securities has valued ACE Market-bound Smart Asia Chemical Bhd (SAC) at 12 times calendar year 2025 (CY2025) earnings per share (EPS), arriving at a fair value of 54 sen.
In a note on Friday, the research house, which does not have a rating on the industrial paint and coating manufacturer, said that moving forward, it estimates the group to register core earnings growth of 32.4% to RM11.8 million for the financial year 2024 (FY2024), 40.1% to RM16.5 million for FY2025, and 44.5% to RM23.9 million for FY2026.
It said the strong growth is mainly supported by the higher production capacity contributed by the new facility in Perak, coupled with more authorised sales channel established.
TA Securities said at an initial public offering price of 40 sen, SAC is priced at a trailing price-earnings ratio (PER) of 17 times FY2023 core EPS.
It said that notably, there is currently no listed company on Bursa Malaysia directly comparable to SAC.
“However, we draw comparisons with Nippon Paint and Kansai Paint from Japan, as well as PPG Industries from the US, all prominent players in the Malaysian paint market.
“We assign a target PER of 12 times CY2025 EPS to SAC, representing a 20% discount to its peers’ average CY2025’s PER and arrive at a fair value of 54 sen,” it said.
It said the discount is to reflect the SAC’s smaller market capitalisation and market share in Malaysia’s painting industry.
“Our valuation also takes into account the company’s substantial EPS growth in the upcoming two years, which outperforms the peers’ average,” it said.