PETALING JAYA: EcoSys (Malaysia) Bhd is well-positioned to benefit from the semiconductor upcycle and India’s solar manufacturing localisation push, says Kenanga Research.
EcoSys, whose two core businesses are ultra high purity (UHP) precision engineering and proprietary abatement systems, is gearing up for its ACE Market listing on Oct 14.
In a note, Kenanga Research said Penang-based EcoSys has an established relationship with a leading global front-end semiconductor equipment manufacturer.
Meanwhile, its abatement business is gaining traction in India, with a high-single-digit number of customers secured.
“Growth will be supported by the expected doubling of its UHP cleanroom capacity and increasing compliance-driven demand for higher-value abatement systems.”
The research house noted that EcoSys’ own technology drives a higher-value abatement mix.
Unlike UHP, which manufactures components based on customers’ specifications, EcoSys develops abatement systems under its own brand, technology and intellectual properties.
Kenanga Research forecasts abatement to account for 44% of EcoSys’ revenue in the financial year 2026 (FY26) and 45% in FY27, driven mainly by higher solar orders.
“As the revenue mix shifts towards proprietary abatement products with higher equipment content, this should support margins and earnings growth.”
Kenanga Research valued EcoSys at 54 sen per share, higher than the initial public offering (IPO) price of 27 sen.
On the other hand, TA Research valued the stock at 45 sen per share.
The IPO of EcoSys entails a public issue of 145,696,000 new ordinary shares.
There is no offer for sale.
At the issue price of 27 sen per share, the IPO implies a market capitalisation of RM154.3mil.
EcoSys is expected to raise RM39mil from its IPO, with 60% earmarked for growth initiatives, including RM17mil for abatement components, RM5mil to enhance operational capabilities and RM2mil for India expansion.
Another RM8mil (20%) will be used to repay bank borrowings.
Looking ahead, TA Research said the favourable industry outlook is underpinned by the ongoing semiconductor supercycle, driven by robust artificial intelligence-related investments.
In addition, supportive government policies and initiatives aimed at attracting further investments into Malaysia are expected to stimulate demand for precision engineering and abatement solutions.
As for EcoSys, its earnings visibility is further supported by a healthy unbilled order book of RM94.3mil as of Aug 25, 2026.
“We estimate the group to record earnings growth of 5.5%, 14%, and 21.1% to RM13.1mil, RM15mil, and RM18.1mil for FY26, FY27 and FY28, respectively.
“This would be backed by an unbilled order book of RM94.3mil, its business expansion plan, and a healthy industry outlook. We also expect the export market to remain the group’s primary revenue contributor.”
In a separate note, PublicInvest Research derived a fair value of 33 sen, with a valuation that is at a 20% discount to the Bursa Malaysia Industrial Products and Services Index’s price-to-earnings ratio of 15 times.
“We believe the discount is justified given its relatively smaller market capitalisation and business scale.
“We forecast EcoSys’ earnings to grow at a three-year compound annual growth rate of about 19%.
“This is supported by continued research and development, capacity expansion at its Simpang Ampat facility, enhanced UHP fabrication capabilities, India market expansion, and rising abatement and UHP demand from the semiconductor, solar photovoltaic and electric vehicle sectors.
“Long-term growth is further underpinned by tighter environmental compliance and continued capacity expansion across these industries,” said PublicInvest Research.
