PETALING JAYA: SBS Nexus Bhd is expected to record earnings growth over the next two years, analysts say.
The provider of integrated marketing and branding services is projected to see growth of 19.9%, 14.7% and 16.6% to RM8mil, RM9mil and RM10mil, respectively, for last year, this year and next year.
TA Research’s fair value for the stock is 29 sen per share, based on a price earnings multiple of 15 times against SBS Nexus’ projected earnings for this year.
SBS Nexus, a branding and marketing solutions specialist, is raising RM30mil from its initial public offering (IPO) ahead of its listing on Bursa Malaysia’s ACE Market on Jan 20.
TA Research said the forecast earnings growth is based on the group’s growth prospects, driven by an asset-light business model delivering high margins, its efforts to tap into the Malay-speaking small and medium enterprises with its MyUsahawanMedia offering, and the continuous growth of its existing business offering that caters to Chinese-speaking businesses.
After the listing, the company’s balance sheet is expected to improve from a net cash position of RM300,000 to a net cash of RM28.2mil.
The research house said the company’s revenue rose significantly by 71% year-on-year in 2023, to RM19mil from RM11mil in the previous year, led by an increase in revenue across all its business segments.
Looking ahead, TA Research projects core earnings for last year to increase, driven by SBS Nexus’ penetration into the bumiputra market, where the company is offering itself as a one-stop coordinator managing integrated marketing and branding services for SMEs.
Subsequently, the research house expects earnings to continue increasing this year and next, supported by the group’s expansion plans and positive industry outlook.
SBS Nexus has over 22 years of experience in the branding and marketing industry and had over 1,054 customers as of FY24.
Its current “ShangHai” service offers digital broadcasts, offline publications and the organisation of business awards and networking events for Chinese-speaking SMEs.
The company said, after the IPO, it plans to relocate to a larger headquarters to support business expansion, buy new equipment, and expand its customer base by targeting the Malay-speaking SME community to diversify beyond its existing Mandarin-speaking market.
TA Research, citing market research, said from 2022 to 2024, digital advertising expenditure rose from RM3.5bil to RM4.4bil at a compounded annual growth rate (CAGR) of 11.9%.
For digital out-of-home media (OHH), the market size as represented by digital OOH advertising expenditure, grew from RM303mil in 2022 to RM424mil in 2024 at a CAGR of 18.3%.
The market size of mobile and web-based applications, and website development solutions, grew from RM629mil in 2022 to RM815.6mil in 2024 at a CAGR of 13.9%.
