KUALA LUMPUR (May 18): Kenanga Research has initiated coverage on Main Market-bound SkyeChip Bhd with an “outperform” call and a target price of RM2.00, more than double the semiconductor design firm’s initial public offering (IPO) price of 88 sen. This is the most optimistic valuation from research houses so far ahead of its May 20 Main Market listing.
The target price implies a potential upside of about 127.3% from the IPO price, surpassing earlier fair value estimates released on May 6 by PublicInvest Research at RM1.68, Malacca Securities at RM1.48, and Mercury Securities at 99 sen. Kenanga is only the second research house to issue a rated note on the stock.
SkyeChip, which designs advanced artificial intelligence (AI) chips that are in high demand but hard to build, was valued at RM1.26 by MBSB Research on Monday.
The Penang-based company specialises in silicon intellectual property (IP) and custom application-specific integrated circuits (ASICs), positioning it within the higher-value front-end segment of the semiconductor value chain, an area Malaysia is seeking to expand under its national semiconductor ambitions.
In its note on Monday, Kenanga said SkyeChip was positioned to benefit from structural growth in customised chip design, AI, high-performance computing and semiconductor outsourcing trends.
“AI inference economics are driving rapid adoption of custom ASICs. High GPU (graphics processing unit) costs and the need for energy-efficient inference workloads are pushing hyperscalers to develop chips in-house, but not every company has the resources or expertise to assemble a full silicon team,” the research house said.
"This creates a structural opportunity for outsourced ASIC implementation partners, positioning them at the centre of the next phase of semiconductor growth."
Kenanga added that SkyeChip “captures the ex-hyperscaler market”, including AI startups, enterprise edge computing players and industrial companies requiring customised chips without internal silicon design capabilities.
The research house said SkyeChip’s integrated circuit design capabilities, broad memory interface IP portfolio and network-on-chip technologies differentiate it from regional peers.
“Our deep dive reveals that SkyeChip is uniquely positioned to capitalise on this trend, differentiated by its more comprehensive and higher-end IP portfolio spanning current- to next-generation technologies,” it said.
Kenanga also said SkyeChip’s business model offered recurring and scalable growth potential through reusable IP blocks and long-term customer relationships.
“While its current revenue is mainly driven by project-based engineering fees and IP licensing, we see the potential for it to evolve towards a royalty-based model tied to customers’ mass production volumes, which would provide a more recurring and scalable revenue stream,” it said.
The research house projected SkyeChip’s revenue to grow by 32% in FY2026 and 30% in FY2027, and its net profit to grow by 30% in FY2026 and 32% in FY2027.
MBSB Research, meanwhile, initiated coverage with a non-rated call and a fair value of RM1.26, implying an upside of about 43.2% from the IPO price.
MBSB highlighted SkyeChip’s “successful rollout of multiple high-performance, high-bandwidth memory interface IPs” and “full IP ownership which enables effective monetisation strategies” as among its key investment merits.
The research house forecast double-digit earnings growth over the next three financial years, supported by ongoing projects, expansion plans and anticipated renewal of pioneer tax status.
“At this juncture, the group has 18 ongoing projects for its silicon IPs and custom ASIC. The total project value amounts to approximately RM247.1 million, of which the unbilled order book stands at RM130.3 million,” it said.
SkyeChip raised RM352 million from its IPO, and its public tranche was oversubscribed by 95 times, the highest retail subscription rate since PETRONAS Chemicals Group Bhd’s (KL:PCHEM) listing in 2010.
The IPO consists entirely of new shares, with no existing shareholders selling their stakes.
More than 60% of the proceeds, or RM211.5 million, have been earmarked for research and development activities. The company also set aside about 16% of the proceeds to expand its operational facilities and computing infrastructure.
The remainder of the funds will go towards licensing and development tools, working capital, and listing-related expenses.
Maybank Investment Bank is the principal adviser, lead bookrunner, managing underwriter, and joint underwriter for the IPO, while CIMB Investment Bank is also the joint underwriter and joint bookrunner for the exercise.