KUALA LUMPUR (July 28): United Asiapac Energy defended its 35 sen IPO price, saying it reflects the company's latest financial performance and that its stronger profit margins are sustainable.
Responding to an MBSB Research report that assigned the company a fair value of 24 sen, principal adviser for the IPO TA Securities Holdings Bhd assistant vice-president of corporate finance Abdul Muiz Mustafa said the valuation was based on older financial information and did not reflect the company's latest earnings.
MBSB Research in its note said its valuation was supported by United Asiapac's strong margins, low debt, healthy cash flow and ownership of specialised well intervention tools, which reduce rental costs. However, it applied a discount because the company is smaller, operates mainly in Malaysia and lacks the scale of global peers.
United Asiapac reported RM21.9 million in gross profit and RM11.3 million in net profit for the nine-month period ended Feb 28, 2026, exceeding MBSB Research's full-year net profit forecast of RM8.2 million for the financial year ended May 31, 2026.
"The price is not at a premium compared with what the research house quoted. The pricing is based on the latest information, which is far above what was forecast," Abdul Muiz said.
The company attributed its improved profitability to owning its well intervention tools instead of renting them, lifting its gross profit margin to 56.17% and net profit margin to 29.16% for the period ended Feb 28, 2026, from 43.66% and 23.76% a year earlier.
Executive director and chief corporate officer Ng Her Yinn told reporters after the launch of the group's prospectus on Tuesday the stronger margins are expected to continue after listing. The company will use RM23.26 million of its RM48.73 million IPO proceeds to buy more equipment, increasing operational capacity by 20% to 30%.
United Asiapac is scheduled to list on Bursa Malaysia's ACE Market on Aug 19.
TA Securities is also the sponsor, underwriter and placement agent for the IPO.