KUALA LUMPUR (May 29): Apex Securities Bhd has recommended investors to 'subscribe' to UUE Holdings Bhd at an initial public offering price of 24 sen, with a fair value of 33 sen, for the stock's attractive valuations, coupled with promising growth prospects.
UUE is principally involved in the provision of underground utilities engineering solutions for the electricity supply and telecommunications industry.
Apex Securities said UUE had recorded double-digit earnings growth over the past years, and is expected to chart a similar growth rate over the foreseeable future, riding onto rapid growth in the utilities industry.
In a note on Wednesday, the research house said UUE is priced at a trailing price-earnings (P/E) of 10.3 times annualised earnings per share (EPS) for the financial year ended Feb 28, 2023 (FY2023), and assigned a target P/E of nine times FY2025 EPS.
“The assigned valuation takes into account of several factors: i) UUE's involvement in manufacturing high-density polyethylene pipes that complements its core business; ii) its established presence in Singapore, which enjoys better margins; and iii) low downturn risks, as horizontal directional drilling technology can be applied to other industries, such as higher power transmission (132kV, 275kV, and 500kV), water, sewerage, and piped gas,” Apex Securities said.