KUALA LUMPUR: PublicInvest Research has derived a fair value (FV) of 35 sen for Aneka Jaringan Holdings Bhd, which is slightly higher than the offer price of 33 sen.
The research house said on Friday the company specialises in foundation construction namely bored piling, which is used to support buildings as well as elevated highways and rail infrastructure.
“Moving forward, Aneka will continue to strengthen its core competency in foundation and basement construction.
“Part of the group's overall strategy is to strengthen its facilities in Malaysia, expand its operations in Indonesia as well as explore opportunities in other regional markets, ” it said.
The FV of 35 sen was based on a 14 times price-to-earnings (PE) multiple to its FY2021F EPS of 2.5 sen.
The IPO is expected to raise approximately RM46.2mil from the issuance of 139.9 million new shares.
Besides utilising 37.5% of the proceeds for purchase of new construction machinery and equipment, 52.6% of the proceeds are meant for repayment of borrowings.
PublicInvest Research said Aneka’s growth will depend on: i) expansion of its fleet of construction machinery and equipment in Malaysia and Indonesia, ii) extension of service offerings in Indonesia, and iii) geographical expansion to Singapore.
As for its competitive strengths, they include: i) being an established specialist in foundation construction, ii) competency in providing alternative designs in foundation and basement construction, iii) Its existing operations in Indonesia are expected to address continuing business opportunities there, and iv) having qualified and experienced management and technical team.
The research house said the key drivers may include: i) continuation of large-scale infrastructure projects in Malaysia, and ii) relocation of capital city as well as infrastructure spending in Indonesia.
However, the key downside risks, among others, include i) peer competition, ii) inherent risks in the construction industry, iii) increases in the cost of construction materials, iv) foreign exchange risks, and v) potential liquidity risks (as a result of slow collection of trade receivables).