KUALA LUMPUR (June 16): Public Investment Bank (PublicInvest) has assigned a 38 sen fair value on heavy machinery manufacturer Liftech Group Bhd, indicating an upside of approximately 31% from its IPO pricing of 29 sen.
In a Tuesday IPO note, PublicInvest’s bullish view is based on a price-earnings multiple of 12 times, tied to Liftech’s earnings per share forecasted for the financial year ending Dec 31, 2027.
The valuation also implies an estimated discount of 37% based on the Bursa Malaysia Industrial Products and Services Index’s earnings ratio of 19 times.
According to PublicInvest, the valuations are justified given that Liftech has a relatively small market capitalisation of below RM100million.
Applications for the IPO are set to close on June 16, with listing scheduled to open on June 30.
Located in Puchong, the company specialises in the designing and manufacturing of heavy industrial lifting equipment such as cranes and gantries. The group also offers maintenance and repair services for any heavy lifting equipment provided.
PublicInvest forecasts Liftech to earn an estimated RM10 million in profits in 2027, based on a revenue of RM85 million.
The group is expected to have a market capitalisation of RM91.3 million upon listing, with an enlarged share capital of nearly 315 million shares.
Out of Liftech’s IPO proceeds of RM23 million, RM13.8 million will moreover be prioritised on the repayment of bank loans, which were mostly incurred from the acquisition of new facilities and the expansion of an existing factory.
The research house also noted that the group’s earnings were likely to grow at a compound annual growth rate (CAGR) of approximately 18%, underpinned by continued expansion across the manufacturing, construction and warehousing sectors in Malaysia.
The company’s growth will also be further supported by its diversified customer base and its experienced management team.
However, PublicInvest also addressed risks associated with Liftech, noting its susceptibility to cyclical demand towards sectors sensitive to economic conditions, alongside its reliance on subcontractors and its vulnerabilities to steel price fluctuations.
Liftech does not have a formal dividend policy at the moment.
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