KUALA LUMPUR (July 20): Kenanga Research has set the most bullish fair value yet for Stratus Global Holdings Bhd’s upcoming initial public offering (IPO), assigning the stock a fair value of RM2 — a 150% premium to its IPO price of 80 sen.
The fair value is based on a price-earnings multiple of 30 times earnings projected for the financial year ending March 31, 2028 (FY2028), representing a 41% discount to local industry peers and a 38% discount to regional counterparts, according to a research note released on Monday.
"The discount reflects Stratus’ relatively smaller market capitalisation and earnings base at listing. Nevertheless, we expect the valuation gap to narrow as the group scales its operations, expands its customer base and delivers sustained earnings growth," said the house.
Kenanga said given its differentiated exposure to the semiconductor factory automation market and favourable industry outlook, it views the current valuation as attractive and undemanding.
In a separate note, PublicInvest Research said Stratus Global’s earnings is set to pick up towards the second half of FY2027, as it maintained its 'outperform' call on the counter with a target price of RM1.72.
“We expect earnings momentum to pick up towards 2HFY2027 due to completion of larger projects,” the house said in a note on Monday.
Stratus Global’s core earnings performance in the first quarter of FY2027 accounted for 14.4% of PublicInvest’s full-year forecast, and came within its expectations due to the project-based nature of the business.
Citing the management, the house said the group expects to secure two out of four projects this year, where each project is valued at about US$20 million to US$45 million.
“While the total automation opportunity across the four fabs could reach US$500 million over the next four-five years. If the expected contracts are secured by July/August, management expects 50%-60% revenue recognition in FY2027, providing meaningful earnings upside,” it said.
Meanwhile, it is also bidding for contracts from another key customer under the Phase 1 Plant 3 project in the northern region, with an estimated automated material handling system (AMHS) project value of US$100 million (RM408 million), and there will be another, larger foundry project (US$250 million) under the Phase 2 development.
The group is well positioned to benefit from the ongoing semiconductor fab expansion cycle, where global semiconductors are estimated to invest over US$500 billion through 2030 to build new facilities.
Stratus specialises in AMHS, which new multi-billion-dollar fabs require investment in such infrastructure.
“The increasing complexity of AI-driven semiconductor fabs should drive demand for sophisticated AMHS solutions, in which Stratus has established engineering capabilities and project execution expertise,” said PublicInvest.