KUALA LUMPUR (Sept 2): Pioneer Heat Holdings Bhd, a mechanical and civil engineering services firm, is a tad overvalued at its ACE Market listing price, an analyst said.
TA Securities said in an unrated note that at the initial public offering price (IPO) of 25 sen per share, Pioneer Heat is valued at RM86.7 million or nearly 11 times earnings for the financial year ended March 31, 2026 (FY2026), when it should be fair valued at 24 sen per share. The research house also flagged slowing earnings growth over the next three years.
Key risks include Pioneer Heat’s dependence on three major customers as well as volatility in revenue and earnings due to project-based operations, TA Securities highlighted.
Applications for the IPO will close on Sept 3 and listing has been scheduled for Sept 17.
Pioneer Heat’s services include piping system engineering and specialised services, such as heat treatment, flange management and non-destructive testing. The company mainly caters to the oil and gas, petrochemical, utility and manufacturing sectors.
Steel Hawk Bhd (KL:HAWK), its peer which has smaller capitalisation, is trading at about five times the projected earnings for 2028, while KKB Engineering Bhd (KL:KKB) is valued at close to 11 times, according to TA Securities’ peer comparison.
Earnings growth at Pioneer Heat will likely slow to 17% for FY2027 from a 57% increase in the recently-ended FY2026, TA Securities’ estimates showed. Revenue, meanwhile, is expected to expand 10% this year after more than doubling in FY2026.
Still, both mechanical and civil engineering industries are expected to sustain their growth supported by expansion in oil-and-gas and utility sectors, ongoing plant maintenance activities, and initiatives to strengthen Malaysia’s energy and industrial infrastructure, TA Securities added.
Pioneer Heat’s IPO is expected to raise RM26.02 million, of which RM21.68 million will go to the company and the remaining RM4.34 million to its three promoters, brothers Wong Hing Chong, Wong Hing Kok and Wong Heng Chong.
Proceeds from the IPO have been earmarked for a new headquarters in Negeri Sembilan, and a new office and workshop in Sarawak. The company is also purchasing machinery and equipment and setting aside some of the funds raised for working capital and to cover listing expenses.
Malacca Securities is the principal adviser, sponsor, underwriter and placement agent for the listing.