KUALA LUMPUR (June 6): TA Securities has valued ACE Market-bound Agricore CS Holdings Bhd (KL:AGRICOR) at 60 sen, and said with an initial public offering (IPO) price of 50 sen per share, Agricore is priced at a price-earnings (P/E) ratio of 14.9 times against its earnings per share (EPS) for the financial year ended Dec 31, 2023 (FY2023).
In a note on Thursday, the research house, which does not have a rating for the stock, said most of Agricore’s peers in Malaysia are privately owned.
“Consequently, we ascribe a target P/E of 12 times to its FY2025 EPS, resulting in a fair value of 60 sen, which is in line with a listed peer in Malaysia.
“We believe the P/E multiple is fair and justified, considering the significant EPS growth expected over the next two years.
“The valuation takes into account the group’s diverse product mix, robust top-line growth, and improving margins,” it said.
TA Securities said that looking ahead, it estimates Agricore’s revenue growth at 12% in FY2024, 15.2% in FY2025, and 17% in FY2026, on rising demand for food ingredients, especially in the food manufacturing and processing industry, as well as the food service industry.
“As revenue increases and margins gradually widen, we anticipate net profit to rise by 19.1% in FY2024, 25.5% in FY2025, and 18.7% in FY2026,” the research house said.