KUALA LUMPUR: CBH Engineering Holdings Bhd jumped 17.85% over its offer price on its debut on the ACE Market of Bursa Malaysia, after raising RM83.4mil from an initial public offering (IPO).
The mechanical and electrical engineering services provider opened at 33 sen a share, representing a five sen increase over its IPO price of 28 sen a share.
Specialising in electrical engineering services, CBH focuses on electricity supply distribution systems for substations and end-user premises.
The company had announced at the launch of its prospectus that the majority of the IPO funds will go towards its business expansion. RM38.5 mil, or 46.2%, will go towards purchasing equipment and components for future projects, while RM17.3mil, or 20.7%, will be set aside for bank guarantees for upcoming projects.
Additionally, RM18.5mil (22.2%) will be used towards the payment to subcontractors for future projects, while RM3.5mil (4.1%) will be set aside towards the recruitment of engineers and other personnel. The remaining RM5.7mil (6.8%), will be used to defray listing expenses.
Rakuten Trade, which has a "buy" recommendation on the stock with a fair value of 44 sen a share, said CBH maintains a strong balance sheet with a net cash position backed by its historical financial performance.
"This solid foundation ensures the company is well-equipped to sustain financial strength and drive long-term growth post listing," it said in an IPO note.
In FY23 and FY24, CBH posted core net profit of RM33mil and RM37.5mil, on revenue of RM208mil and RM251.5mil, respectively.
For the next two financial years (FY25 and FY26), Rakuten Trade projects core net earnings will grow to RM45.8mil and RM56mil, while revenue will climb to RM307.7mil and RM380.4mil respectively.
