RHB Research, which expects the Johor builder's current order book of RM250mil to support earnings growth over the next three years, noted its potential to bag more new contracts from its existing tender book.
"Given the robust construction activity in Johor, the group anchors its growth strategy by expanding reach to the other districts.
"This looks to be a sustainable approach as about 10% of the total value of construction work done in Malaysia comes from Johor," it said in an IPO note.
It added that the growing industrial building construction segment should boost further opportunities in the state.
At present, the research house remains conservative on the group's replenishment rate for FY21-23, projecting only RM200mil per annum, given the slowdown caused by Covid-19.
The research house has a fair value of 76 sen per share based on 12x FY22 forecast price-earnings, in line with the multiple pegged to its listed peers.
However, it noted the possibility of a further share price re-rating based on its expectation that Haily has good potential to achieve higher net profit margin and secure new contracts from its existing tender book.
The construction company, which is slated to make its debut on Bursa Malaysia on July 21, aims to raise RM20.4mil in its IPO, of which about 21% will go towards new construction machinery, equipment and software while the remainder will go towards working capital and repaying borrowings.
The IPO entails a public issue of 30 million shares at 68 sen each and will be closed for application today.
Of the 30 million shares, it is offering 8.92 million shares to the public, 10 million to eligible directors, employees and persons who have contributed to the group’s success, and 11.08 million to selected investors by way of a private placement.
Additionally, there will be an offer for sale by its promoter that involves 18 million existing ordinary shares in Haily by way of a private placement to selected investors.
TA Securities Holdings Bhd is the principal adviser, sponsor, underwriter and placement agent in relation to the IPO.