KUALA LUMPUR (April 3): 5E Resources Holdings Bhd, a scheduled waste management firm, is set for strong earnings growth that will underpin share price upside of up to 50% upon listing, analysts said.
A planned capacity expansion in Johor could help 5E Resources deliver a massive increase to earnings this year, while its upcoming facility in Perak is expected to provide a longer-term boost, according to Tradeview Research and RHB Research.
“We see 5E as a direct beneficiary of the structural shift towards circular recycling solutions,” Tradeview Research said in projecting a 50% growth in earnings per share for 2026.
The research house is recommending investors to subscribe to the initial public offering (IPO) with a target price of 37 sen, representing a 42% upside in 12 months from its listing price of 26 sen apiece.
Application for the company's IPO will be closed on April 3, and the listing on the ACE Market is expected to be held on April 15.
5E Resources operates out of Pasir Gudang, Johor, offering end-to-end scheduled waste management services, including testing, collection, recovery and recycling, with about 18 years of operating history.
The company holds licences covering 34 out of the 77 regulated scheduled waste categories under Malaysian environmental regulations, and has an annual processing capacity of over 280,000 tonnes.
The business is hard to replicate, according to Tradeview Research, noting stringent licensing, long site approval timelines, official quota constraints and the need for customised machinery for superior recovery yield.
For RHB Research, which has a fair value of 39 sen on 5E Resources, the current elevated fossil fuel prices could benefit the company as it could pass on processing costs to its clients based on prevailing market rates.
Further, the company also extracts reusable materials such as acids, oils, solvents, metals and fuel products, creating an additional revenue stream from recovered and recycled products.
RHB Research is projecting an average annual earnings growth of 20% over the next three years while net margins, coming in at a little under 30% in 2025, will be supported by higher cost savings and scale benefits with better operating leverage.
“As volumes scale up, operating leverage should drive margin expansion,” the research house added.