KUALA LUMPUR: Shares in KPower, which has been on an uptrend, climbed to a record high in early trade Wednesday as investors reacted positively on its venture into the medical sector.
The counter added 3.5%, or 27 sen to RM7.99. It is currently trading at a PE ratio of 45.6 times.
KPower has entered into a share sale agreement to acquire a 70% stake in Granulab (M) Sdn Bhd, a wholly owned unit of SIRIM Bhd’s subsidiary, Sirim Tech Venture Sdn Bhd, for RM1mil cash.
Granulab is involved in medical device manufacturing for granular synthetic bone graft “Granumas”, the only halal synthetic bone graft product in Malaysia, and producing medical devices and products.
KPower said the acquisition was in line with its intention to venture into the healthcare and technology business that can create long term revenue growth and income sustainability.
KPower has also inked a US$6mil (RM24.05mil) contract to supply polymerase chain reaction (PCR) reagent kits for Covid-19 to PT Arna Cahaya Medika in Jakarta, Indonesia.
RHB Research is positive on KPower acquiring a 70% stake in Granulab to venture into the medical sector.
It added that the US$6mil PCR test kit supply contract also showcased its ability to secure medical supply-related jobs in the Indonesian
“We are positive on this acquisition, which marks the company’s maiden foray into healthcare. We have been guided that Granulab has been incurring minimal losses of over RM1mil in the past, but management is confident that such an acquisition will enable KPower to execute larger business expansion activities,” RHB said.
In the longer run, KPower sees more value from the strategic partnership with SIRIM, it added.
RHB has maintained its but call on KPower with a higher target price of RM8.92 from RM6.46, pegged to a higher multiple of 20x FY22F P/E, as it sees higher general earnings growth potential in the longer term from the healthcare segment.