KUALA LUMPUR : PublicInvest Research said that shares Salutica Bhd
, which is going for listing on May 18, has a fair value of 99 sen, or a 24% upside from its indicative retail price of 80 sen.
In a note on Thursday, the research house said that Salutica, a vertically integrated manufacturer specializing in Bluetooth-enabled electronic products, is set to capitalize on the steady adoption rate of Bluetooth devices in recent years.
“Our earnings expectations are supported by the contribution of new capacity, efficiency improvements through the upgrading of Salutica's manufacturing facilities, and the increasing adoption of Bluetooth technology in other areas,” it said.
According to PublicInvest, global Bluetooth-enabled device shipments grew at a strong compounded annual growth rate (CAGR) of 18.6% from 1.8 billion units in 2011 to 3 billion units in 2014.
Salutica is set to raise approximately RM62.4mil from the issuance of 78 million new shares from its initial public offering.
Its fair value of 99 sen for Salutica's stock is premised on an earnings multiple of 12 times its financial year 2016 (FY2016) earnings with an estimated earnings per share of 8.3 sen.
Apart from its in-house brand called FOBO, among the products manufactured by the company include Bluetooth stereo headsets, other electronic products and precision parts as well as components such as 3D glasses.
Additionally, the company has also developed a Bluetooth-enabled tyre pressure monitoring system, electronic sensors, tracking devices and beacon transmitters under the FOBO name. At present, FOBO products are sold mostly in developed countries through direct e-commerce sales on websites, third party platforms or appinted distributors.
Most of Salutica's customers comprise multinational corporations such as Plantrocnics, Jaybird and Sony, contributing about 90% of the company's total revenue.
PublicInvest noted that Salutica is targeting a long term payout ratio of at least 30% of its net profits.
“With strong cash reserves after listing, a healthy dividend payout should be sustained. We estimate the company's dividend yield for FY17 at 3.1% on the back of a 30% payout ratio assumption,” it said.
Limited time offer:
Just RM5 per month.
