KUALA LUMPUR (Jan 27): Apex Securities has attached a 67% premium to integrated water piping solutions company ISF Group Bhd, which is set to list on Bursa Malaysia’s ACE Market on Wednesday at 33 sen per share.
The firm said its bullish stance on the company is on account of its strong balance sheet and above-average margins from exposure to high-growth segments such as data centres and industrial properties.
The firm’s target price of 55 sen is based on a target price-to-earnings (P/E) of 18.7 times applied to its financial year ending Dec 31, 2026 (FY2026) core earnings per share of 2.9 sen. This represents about a 30% premium to the Malaysian construction sector’s average P/E of 14.5 times.
ISF Group, through its subsidiary Yeo Plumber Sdn Bhd, offers integrated piping solutions for buildings and water infrastructure. Founded in Johor, it has completed projects across Peninsular Malaysia in industrial, data centre, residential, commercial, institutional, healthcare, and infrastructure sectors.
Apex Securities highlighted ISF Group’s strong growth, with revenue rising from RM21.6 million to RM54.7 million, a compounded annual growth rate of 59.2%, and net profit margin improving from 4.3% to 17.6%, driven by higher-margin data centre projects.
Data centres now account for an estimated 47.5% of FY2025 revenue, up from 4.8% in FY2022, with average gross margins of 39.8% versus 24.4% for residential projects.
ISF Group’s expertise in integrated water piping positions it to win more of these high-margin, technically complex projects, Apex Securities said.
As at Dec 3, 2025, ISF Group’s outstanding unbilled order book stood at RM120.7 million, underpinning revenue visibility through to FY2028. Residential projects form the largest component at 56.9%, followed by commercial properties (17.8%), data centres (13.9%), industrial properties (9.1%) and other segments (2.3%).
Beyond its secured projects, the group maintains a tender pipeline of around RM460 million, with around 60% concentrated in higher-growth and higher-margin data centre and industrial segments.
Apex Securities expects ISF Group core earnings to jump 160.9% in FY2025, then grow 15.9% in FY2026 and 23.1% in FY2027, supported by a RM120.7 million order book and assumed RM150 million annual replenishment. Higher-margin data centre and industrial projects will drive growth, while residential and commercial projects (75% of the order book) provide stable earnings.
ISF Group does not have a formal dividend policy, but Apex Securities assumes a dividend payout ratio of 40%, based on dividends declared in FY2025.
ISF Group’s initial public offering (IPO) is expected to raise over RM61 million for the water piping company and close to RM30 million for its founding family. ISF Group, a company based in Pontian, Johor, was co-founded by Ai Sew Fuat and his wife Lim Ay Yum at the end of 2000.
ISF Group will use 19% of its IPO funds to expand operations, buy equipment, and hire staff, including opening a new head office. It also plans offices in Selangor/Negeri Sembilan and Penang. The remaining two-thirds will fund working capital for materials and subcontractor payments.