PETALING JAYA: ACE Market-bound Sum Technology Bhd’s earnings growth is expected to gain traction, given the group’s niche positioning within the cleanroom and mission-critical engineering space, says MBSB Research.
The engineering solutions provider’s revenue is primarily supported by cleanroom engineering, procurement, construction and management (EPCM) services, mechanical, electrical, process utilities and fire- fighting or MEPF utilities and mechanical, ventilation and air-conditioning or MVAC-related activivties.
In a note to clients, MBSB Research said it anticipates the group’s earnings to register double-digit growth of 17.1%, 20.6% and 18.8% for the financial year 2026 (FY26), FY27 and FY28, respectively.
This was after taking into consideration the ongoing project execution, continued replenishment from semiconductor, electrical and electronics (E&E) and data centre (DC) customers, as well as capacity expansion initiatives, the brokerage noted.
Several key initiatives include a new Jenjarom facility in Selangor and a dedicated Manila office in the Philippines that will position the group to benefit from rising demand for cleanroom and mission-critical engineering solutions.
Based on the group’s initial public offering (IPO) price of 28 sen per share, MBSB Research said Sum Technology is valued at approximately RM126mil market capitalisation and trades at 20.8 times the FY25 price-earnings (PE).
“As we roll forward our valuation base year to FY26, we apply a target FY26 forecast PE of 20.8 times, which is broadly in line with its IPO valuation and reflects its niche market positioning and growth prospects. Applying the target multiple to the FY26 forecast earnings per share of 1.58 sen leads to our derived fair value of 33 sen,” the brokerage noted.
Locally, Critical Holdings Bhd
and iCents Group Holdings Bhd are among the closest listed peers, given their exposure to mission-critical facilities, cleanroom engineering and DC-related infrastructure.
While Sum Technology’s valuation is below iCents’ 36.7 times PE, MBSB Research said the group remains above Critical Holdings’ 18.6 times PE.
“We believe the premium is justified, given Sum Technology’s integrated cleanroom EPCM capabilities, healthy profitability profile and direct exposure to structural growth themes such as semiconductor manufacturing and DC expansion,” said MBSB Research.
The key risks include slower order-book replenishment amid intense competition and rapid technological changes within the cleanroom EPCM industry, heavy reliance on key management personnel for business continuity and project execution, rising capital expenditure requirements and dependence on skilled engineers and technical personnel amid industry-wide talent shortages.
