The company is scheduled to go public on the ACE Market on July 21, aiming to raise RM20.4m
by NUR HAZIQAH A MALEK / Pic Source: haily.my
HAILY Group Bhd has been given a fair value (FV) between 76 sen and 83 sen by analysts ahead of its ACE-Market listing.
Haily is scheduled to go public on the ACE Market on July 21, aiming to raise RM20.4 million based on an offer price of 68 sen for 30 million new shares offered to the public.
RHB Investment Bank Bhd analyst Muhammad Danial Abd Razak has derived an FV of 76 sen based on 12 times the financial year 2022 forecast (FY22F) price-to-earnings (PE) ratio.
“This is in line with the multiple we pegged to its listed peers and on that account, the possibility of a further share price rerating cannot be dismissed. “This is based on our expectation that Haily has good potential to achieve higher net profit margin and bag more new contracts from its existing tender book,” Muhammad Danial wrote in a research report yesterday.
The analyst said Haily’s current orderbook should support its FY22FY23F earnings growth.
“Haily will continue to leverage on its core competency in residential and non-residential building construction.
“Given the robust construction activity in Johor, the group anchors its growth strategy by expanding reach to the other districts,” he said.
Muhammad Danial said it looks to be a sustainable approach as about 10% of the total value of construction work done in Malaysia comes from Johor. Moreover, the industrial building construction segment is also growing to provide further opportunities in the state.
He also said the company’s readiness to commit dividend distribution of at least 30% of net profit signals its ability to generate strong cashflow and profit. Nevertheless, he did not discount its potential of paying more than 30%, as evidenced by past payout ratios of 24% to 80%.
The group’s outstanding orderbook of RM250 million comprises 53% of jobs for residential and 47% for non-residential buildings.
The remainder comes from two civil engineering related construction projects, which are expected to generate revenue into FY23F.
Downside risks include a failure to secure new contracts, more intense competition among infrastructure and building contractors and a prolonged downturn in retail and property markets.
Public Investment Bank Bhd derived a FV of 82 sen for the construction group based on 12 times FY22F earnings per share of 6.8 sen.
The research team said Haily’s growth would depend on expansion into the other districts in Johor, the purchase of new construction machinery and equipment, and the enhancement of office hardware and software.
Catalysts for the group include low-interest rates and favourable lending policies, availability of loans to fund construction activities, and government initiatives such as transformation programmes and affordable housing schemes.
TA Securities Holdings Bhd analyst Chan Mun Chun has assigned a target PE multiple of 12 times to Haily and arrived at a FV of 83 sen per share considering the group has established a track record in building construction and commitment to delivering good quality works, among others.
The brokerage firm estimated the group to record earnings growths of 2.9%, 17.4% and 12.1% to RM10.5 million, RM12.3 million, and RM13.8 million for FY21, FY22 and FY23 respectively, supported by its healthy unbilled orderbook of RM249.6 million as of June 10, 2021.