KUALA LUMPUR: Shares in Northern Solar Holdings Bhd surged 42.85% over its initial public offering (IPO) price on its first day of trading as investors welcomed the prospects of the solar renewable energy firm.
The company opened for trading on the ACE Market at 90 sen a share, a 27% increase over its IPO price of 63 sen a share.
According to Rakuten Trade's IPO note on the company, Northern Solar is well-positioned to capitalise on the robust demand in the solar photovoltaic (PV) industry, which is projected to grow at 23.5% CAGR from 2023 to 2026.
"By offering end-to-end solar solutions leveraging its operational expertise, Northern Solar will assist their clients in reaping the benefits of government incentives," said the research firm.
It added that the company’s remaining orderbook of RM83.2mil as of November 2024 provides earnings visibility over the next 12 months.
It said the company's solid margins also puts it in position to scale up and compete in the country's booming renewable energy space, while its solid net cash position ensures financial strength post-listing, supporting long-term growth.
Rakuten Trade has a "buy" call on Northern Solar with a fair value of 86 sen a share.
With RM42.4mil raised from the IPO, Northern Solar plans to utilise RM29.2mil or 68.8% of the proceeds on working capital to expand its solar PV systems business.
A further RM3.2mil or 7.4% of the proceeds will go towards setting up a new corporate office with an engineering command centre in Petaling Jaya, Selangor, and expanding offices in Johor and Penang to boost its presence in southern and northern Peninsular Malaysia.
The remainder of the proceeds will be used to repay bank borrowings amounting to RM5.5mil (13%) and to defray the estimated listing expenses of RM4.6mil (10.8%).
Northern Solar posted a net profit of RM7.43mil in the six months ended Sept 30, 2024, an increase of about 73% year-on-year, on the back of RM40.16mil in revenue. Its net profit margin stood at 18.5%.
