KUALA LUMPUR (Aug 5): Rakuten Trade Research has assigned a fair value of 50 sen to United Asiapac Energy Bhd (UNIPAC), implying a 42.9% upside from its 35 sen initial public offering (IPO) price. 

In a note Wednesday, Rakuten said the valuation is based on expected earnings growth through FY2027, supported by Petroliam Nasional Bhd (PETRONAS) continued upstream spending, UNIPAC's strong position as one of the few well intervention service providers licensed by both PETRONAS and Petros, and improving profitability following its shift to owning rather than renting intervention tools.  

The research house valued the company at 15 times its forecast FY2027 earnings, in line with the average valuation of companies in the FBM Small Cap Index, according to its IPO note released on Wednesday.

The research house projects United Asiapac’s core net profit to almost double to RM13.5 million in FY2026 from RM6.98 million in FY2025 before rising further to RM18.2 million in FY2027, and attached a “buy” call on the stock.

The company also plans to use RM23.3 million, or 47.7% of its IPO proceeds, to acquire new equipment, which is expected to increase capacity, reduce costs and support its expansion in Sarawak and Sabah.

UNIPAC is well-positioned to benefit from PETRONAS' continued spending on upstream oil and gas (O&G) activities. PETRONAS plans to invest RM25.1 billion in domestic capital expenditure in FY25, including RM9.6 billion for exploration, field development and well maintenance. It also has 663 contracted wells scheduled through 2028 and 293 wells earmarked for mandatory plug and abandonment work.

Rakuten said the group has a competitive advantage as one of the few well intervention service providers licensed by both PETRONAS and Petros across all three Malaysian hydrocarbon basins, enabling it to serve opportunities in both Peninsular Malaysia and East Malaysia, including through its 30%-owned joint venture, Asiapac Sabah.

UNIPAC's strategy of owning, rather than renting, intervention tools has significantly improved profitability. Equipment rental costs fell from 49.4% of cost of sales in FY24 to 22.8% in the four-month financial period ended April 30, 2026 (FPE26), lifting gross profit margin from 24.3% in FY23 to 56.2%, while net profit margin increased to 29%.

The company will use RM23.3 million, or 47.7% of its IPO proceeds, to acquire 33 new intervention tools. The investment is expected to increase its capacity to handle multiple jobs simultaneously, reduce reliance on rented equipment, expand higher-value well intervention services, and strengthen its presence in Sarawak and Sabah.

The IPO, priced at 35 sen per share, implies a market capitalisation of RM192.5 million upon listing. Gross proceeds of RM48.73 million will mainly be used to acquire well intervention tools and equipment, alongside funding workforce expansion, working capital, a new corporate office and the recruitment of engineers to support new service offerings.

United Asiapac specialises in well intervention services for the upstream O&G industry, including fishing services, plug and abandonment, sidetracking and other specialised intervention works. The company mainly operates from Kemaman, Terengganu and Labuan, and is scheduled to list on the ACE Market on Aug 19.

As at Feb 28, 2026, the group had secured RM61.1 million in purchase orders, with RM27.3 million yet to be recognised and expected to be fulfilled by February 2027, providing earnings visibility in the near term.

Rakuten said the IPO proceeds will allow United Asiapac to expand its equipment fleet, reduce reliance on rented tools and improve mobilisation efficiency, while strengthening its ability to secure more contracts from both existing and new upstream operators. 

The research house also expects the company to move into a net cash position after listing from a net gearing of 0.09 times as at end-February 2026.