At the prospectus launch. (From left) Ooi Guan Hoe, Non-Independent Executive Director of Kee Ming Group; Susie Chung Kim Lan, Non-Independent Executive Director; Tengku Faizwa Tengku Razif, Independent Non-Executive Chairperson; Choy Sook Yan, Non-Independent Executive Director; Liew Kar Hoe, Non-Independent Executive Director and Managing Director; Datuk Seri Saarani Mohamad, Menteri Besar Perak; Chang Lih Kang, Menteri Sains, Teknologi dan Inovasi (Mosti); Ku Mun Fong, Head of Corporate Finance of TA Securities Holdings Bhd; Kelvin Khoo, CEO of Eco Asia Capital Advisory Sdn Bhd; Lim Chin Siu, Independent Executive Director of Kee Ming Group; and Lee Chin Hui, Non-Independent Executive Director
PETALING JAYA: The fair-value placed on Kee Ming Group Bhd, which is enroute to a listing on the ACE Market of Bursa Malaysia, by two research houses is 52 sen and 57 sen a share.
RHB Research ascribed an 11 times price-earnings ratio (PER) for next year to arrive at a fair value of 52 sen a share.
Apex Research recommends a target price of 57 sen a share, premised on 15 times next year’s earnings per share of 3.8 sen, which implies a 50% upside to the initial public offering (IPO) price.
Kee Ming, the provider of mechanical and electrical engineering solutions plans to raise RM31.50mil from its IPO.
It is offering 82.86 million ordinary shares at 38 sen per share.
“The target valuation is below peers’ one-year forward PER average of 19.6 times, to reflect Kee Ming’s indicative market capitalisation of RM123.5mil, which is smaller than that of large-cap contractors,’’ RHB Research said.
For the peer comparison purposes, the research house selected companies involved in the construction sector, such as Gamuda Bhd
, IJM Corp Bhd, Sunway Construction Group Bhd, Kerjaya Prospek Group Bhd and Binastra Corp Bhd.
RHB Research said the key risk to its recommendation on Kee Ming are geographical concentration in Perak and Penang, slow order book replenishment, and cost overruns on fixed-price contracts.
Kee Ming’s revenue has historically been concentrated in Perak, its home state, which accounted for 93.5% of revenue in 2023.
The group has progressively diversified its geographical footprint, with Perak’s contribution moderating to 52.4% last year, as contributions from Penang (36%) and Selangor (8.7%) gained further traction.
“We project three-year compounded annual growth rate (CAGR) for revenue of 32% from this year to 2028,” RHB Research said.
Apex Research said that the group delivered strong bottomline growth, with net profit increasing from RM600,000 to RM8.2mil over a three-year period, implying a CAGR of 257.4%.
“Looking ahead, we forecast core earnings to grow by 42%, 12%, and 15% to RM11mil, RM13mil, and RM15mil from this year to 2028,” Apex Research said.
Kee Ming has a tender book of about RM700mil, with about 40% comprising higher-value projects, predominantly from industrial developments, including data centre-related projects.
“Based on historical win rates of about 15% to 20%, this implies potential incremental order wins of about RM100 to RM140mil, thereby lifting its total order book to RM310mil,” Apex Research said.
With Solarvest Holdings Bhd holding a 23.9% associate stake, Kee Ming has entered the solar interconnection segment, securing RM55.7mil of contracts to date and providing an additional earnings growth, the research house added.
“We also do not discount the possibility of Kee Ming being involved in residential property projects in Ipoh such as the Sunway Ipoh residential project,” RHB Research said.
Based on its customer profiles, Kee Ming has established working relationships with several large and established contractors, including Sunway Construction and Gamuda Engineering, alongside other main contractors, Apex Research said.
