BUILDING construction services provider Siab Holdings Bhd which in en route for a listing on the ACE Market of Bursa Malaysia on Feb 28 (tentative) has been accorded a fair value of 37 sen or a 23.3% upside from its initial public offering (IPO) price of 30 sen by Malacca Securities Research.
The research house arrived at the 37 sen fair value by assigning a target price-to-earnings ratio (PE) of 12 times to the company’s FY2022F earnings per share (EPS).
“The assigned target PE is in line with the Bursa Malaysia’s construction sector forward PE of 12.1 times for 2022F,” analyst Kenneth Leong pointed out in an IPO note report.
“We like Siab Holdings for its ability to generate improving track record in terms of financial performance and being well-backed by a solid outstanding order book at RM545 mil that will sustain earnings visibility over the next two years.”
Elsewhere, Malacca Securities Research is also impressed with Siab Holdings’ strong balance sheet position which is equipped with a relatively low gearing level and sturdy double-digit return on equity (ROE) over the years.
“While Siab Holdings does not adopt a formal dividend policy, we note that the group has been operating at a net operating cash flow over the years under review and we believe that preserving capital for future expansion would be the current key focus,” added the research house.
Incorporated in 1984 as Siab (M) Sdn Bhd, Siab Holdings has secured several notable projects with a combined value of circa RM1.03 bil.
The group has experience to carry out a wide variety of construction projects which includes non-residential buildings such as commercial buildings (office towers and shopping complex), institutional buildings (hospital), industrial buildings (warehouse and factory) and residential buildings such as high-rise apartments and condominiums.
Some of its notable completed projects include the Jaya 99, Plaza 33 and Menara LGB as well as three design and build projects namely Hospital Bentong, The Pines and the F&N Intelligent Industrial Building.
Siab Holdings aims to raise about RM36.72 mil with the issuance of 122.41 million new shares which is equivalent to 25% of its enlarged share capital. Of the 122.41 million shares, 24.48 million shares will be made available to the Malaysian public.
Part of the RM36.72 mil proceed will be used to enhance the group’s machinery and equipment to support its business expansion into higher value projects which will in turn enhance shareholders’ value.
The group also intends to utilise part of the proceeds to construct a storage facility to offset its rental cost, implement building information modelling (BIM) system to improve its design and build services, upgrade and integrate back office software and systems to streamline and centralise back office operation, as well as office expansion to cater for additional work force.
As of now, Siab Holdings has about eight ongoing construction projects with outstanding contract value of RM545 mil which is due for completion between 2022 and 2024. – Feb 8, 2022
