KUALA LUMPUR (Oct 2): EGH International Bhd's listing price undervalues the interior fit-out firm by 37%, even as earnings are projected to grow strongly over the next three years, an analyst said.
The fair value for EGH International should be 22 sen versus the initial public offering (IPO) price of 16 sen per share, TA Securities said in an unrated note. At 22 sen, the stock would be valued at 11 times its forward earnings, still a 40% discount to the construction firm’s average of about 18 times.
“While we acknowledge the group’s solid earnings growth trajectory backed up by its healthy unbilled order book and expansion plans, the valuation discount reflects EGH’s smaller market capitalisation post-listing,” the house said.
Applications for the IPO will close on Oct 5. EGH International is scheduled to list on the ACE Market on Oct 16.
Backed by Datuk Doh Jee Ming, the managing director of property developer Lagenda Properties Bhd (KL:LAGENDA), EGH International is mainly involved in interior fit-out services and the sale of furniture, fixtures and equipment and building materials.
The company based in Puchong, Selangor has done work for hotels and resorts, healthcare facilities, educational institutions and airport lounges. Based on the IPO price of 16 sen, EGH International will have a market capitalisation of RM160 million, valuing it at about 15 times the trailing earnings.
TA Securities is projecting an earnings jump of 64% for 2026 before growing by 32% in 2027, noting that EGH International currently has outstanding jobs worth RM313.5 million that will last the company for the next two years.
“We believe in the group’s sizeable existing backlog, coupled with its established execution track record and expanding project capabilities,” the research house said.
Net margins, meanwhile, have expanded in recent years, highlighting EGH International’s “enhanced project mix and stronger earnings conversion, providing a more favourable earnings profile going forward”, TA Securities added.