KUALA LUMPUR (March 10): Analysts have attached an at least 16% premium to construction company Wawasan Dengkil Holdings Bhd’s fair value ahead of its listing on the ACE Market on March 25, with its initial public offering (IPO) priced at 25 sen a share.

Applications for the IPO will close on Tuesday, March 11.

TA Securities has set a target price-earnings ratio of 12 times for Wawasan Dengkil's 2025 earnings, 15% lower than its peers’ average, resulting in a fair value of 29 sen a share for the stock, due to its smaller market capitalisation of RM135 million, despite its higher return on equity.

Meanwhile, Public Investment Bank, which attached a fair value of 30 sen to the company, pegged the company to its peers’ average price-earnings multiple of 12 times against its forecast earnings per share for the financial year ending June 30, 2026 (FY2026), backed by earnings growth from the company's existing order book and tender book.

The research house said the earthworks and civil engineering firm had established track record of robust net profit margins, ranging from 6% to 11%, surpassing the 2% to 7% margins typically observed among its competitors.

Wawasan Dengkil’s operations involve large-scale excavation, relocation, and compaction of soil and rock to create embankments and platforms, forming a foundation for construction works.   

The company also builds roads, drainage and sewerage systems.  

Looking ahead, the research house forecast a net profit compound annual growth rate (CAGR) of 11.3% for Wawasan Dengkil, culminating in a projected net profit of RM13.5 million for FY2026.  

This projection is underpinned by the company’s existing order book, which currently stands at RM378.1 million. 

The group, with over 20 years of experience in Malaysia’s construction industry, has completed 101 contracts worth RM464.3 million since 2003.  

It aims to expand within the local civil engineering and special trade work market, focusing on large-scale projects above RM100 million, and also to bid for more solar farm infrastructure projects.

As of Jan 28, the group had 14 ongoing projects worth RM378.1 million, and was involved in tenders totalling RM724.8 million leveraging on its experience in major infrastructure projects like the Central Spine Road and Light Rail Transit Line 3.

The group is also pursuing solar farm opportunities, having tendered RM572.2 million in projects with a 10% estimated success rate.

The group owns a sizeable fleet of machineries and commercial vehicles, reducing reliance on third-party rentals and lowering operational costs. As at Jan 28, its fleet included 54 tipper trucks, 105 dump trucks, 67 excavators, and various other heavy machinery.

The group is led by executive directors Lim Soon Yik and Lim Kok Seng, with 11 and 18 years of industry experience respectively. It also counts Samaiden Group Bhd’s (KL:SAMAIDEN) Datuk Chow Pui Hee and Reservoir Link Energy Bhd’s (KL:RL) Thien Chiet Chai as independent directors of the company, in a bid to enhance the group’s renewable energy expertise and network in securing and executing solar farm infrastructure projects.

The Malaysian construction industry is expected to reach RM96.8 billion by 2029, with a CAGR of 8.4%. The civil engineering and special trade work market is also expected to expand to RM58.3 billion at a CAGR of 9.4%.

Downside risks to Public Investment Bank’s projections include competition among industry players, dependency on foreign workers, and uncertainty in future project awards from key customers.

Wawasan Dengkil's IPO entails a public issue of about 108 million new shares, and an offer for sale of 54 million shares, which accounts for 30% of the group's enlarged share capital.

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Wawasan Dengkil launches ACE Market IPO at 25 sen per share, applications open till March 11