KUALA LUMPUR (Jan 29): Hock Soon Capital Bhd’s listing price overvalued the poultry producer by nearly 27% even as its earnings growth would remain resilient, according to TA Securities.
At the initial public offering (IPO) price of 60 sen per share, Hock Soon would be valued at about seven times the latest reported profit, but the earnings multiple would jump to more than 100 times when accounting gains and government subsidies are excluded, the research house said.
The fair value should be 44 sen for Hock Soon, which values the company at seven times this year’s earnings and is in line with the poultry industry, the research house said.
Hock Soon is now accepting applications for its IPO until Jan 30, and the Perak-based family-run company is scheduled to list on the Main Market on Feb 13.
The IPO is expected to raise RM90 million, of which RM60 million will go to Hock Soon to fund expansion, and the remaining RM30 million will go to the founding Ong family, according to its prospectus.
Current shareholders cashing out part of their stakes include managing director Ong Boon Leng, his wife and executive director Lim Suk Gen as well as their children Keat Hoe and Keat Qian. Both siblings are also executive directors in Hock Soon.
“Looking ahead, Hock Soon’s growth trajectory is expected to remain resilient, supported by ongoing capacity expansion, stable demand from existing customers, and a growing client base,” TA Securities said.
Eggs are also the most affordable staple protein in Malaysia, making its business robust and resilient to economic downturns, the research house noted.
After excluding extraordinary items, Hock Soon is to make a net profit of RM30.9 million for the financial year ending Sept 2026 (FY2026) compared to RM3 million in FY2025, according to the research house’s forecasts.