by S BIRRUNTHA / pic by RAZAK GHAZALI
POWERWELL Holdings Bhd, the fifth listing on Bursa Malaysia Bhd and the first in the ACE Market this year, is upbeat on its 2020 prospects on the back of renewed mega infrastructure projects in the country.
The electrical switchgear manufacturer debuted at 25.5 sen a share, and closed its maiden trading day at a premium of 3.5 sen or 28.5 sen, giving it a market capitalisation of RM145.14 million.
Powerwell stated that the revival of mega projects such as East Coast Rail Link (ECRL) and Mass Rapid Transit Line 3 (MRT3) will lead to a pickup in construction activities and be underpinned by demand for switchboards.
Its ED Ricky Lee said the company has an outstanding orderbook of RM59 million and participated in the MRT1 and Kelana Jaya light rail transit (LRT) line projects previously.
“We are currently tendering for the LRT3 contracts. Now that we are listed on the ACE Market, we are determined to work harder and bring the company forward. We expect our earnings to be supported by gradual enhancement of local construction activities which will, in turn, increase the demand for electricity distribution product,” he added.
The company raised RM21.85 million from its listing exercise, of which RM10.27 million has been earmarked for capital expenditure including the purchase of machinery and equipment, and enhancement of its planning systems and hardware.
The remaining RM3.87 million will be utilised for certification expenditure, RM3.62 million for working capital and RM4.1 million has been set aside to cover the listing expenses.
Powerwell MD Jason Tham said the listing provides the group with a platform to make further advances into the capital markets for its development.
Throughout 2012 to 2019, Powerwell has been actively involved in the design, manufacturing, and trading of electricity distribution products which comprise low voltage and medium voltage switchgears.
The company also supplies to projects in countries like Vietnam, Bangladesh, Indonesia, Philippines, Cambodia, Singapore, Pakistan, Myanmar, Dubai, Japan, and Qatar.
It has established a representative office in Indonesia and appointed distributors in Bangladesh, Indonesia, Singapore, Philippines and Pakistan.
In a recent report, Inter-Pacific Research Sdn Bhd expects Powerwell’s earnings growth to be muted through the financial year (FY) ending Dec 31, 2019 and FY20 due to lower average project value in FY19 and a recognition of RM3.1 million worth of listing expenses in FY20 that is anticipated to offset the firm’s improved margins subsequent to higher operating efficiency and from the enterprise resource planning upgrade.
The research firm has a fair value of 22 sen on Powerwell, based on a price-to-earnings ratio of 12 times the group’s forecast FY20 earnings, parallel to the FTSE Bursa Malaysia Small Cap Index’s valuation.
Powerwell IPO shares to the public were oversubscribed by 24.27 times.