by SHAFIQQUL ALIFF / graphic by MZUKRI MOHAMAD

MN HOLDINGS Bhd (MNHB) growth will be dependent on the group enhancement of its machinery and equipment assets as the group mainly serves customers in the power, gas, sewerage and telecommunications industries in Malaysia, according to Public Investment Bank Bhd.

“We derive a fair value of 30 sen based on a 10 times price-earnings multiple to its calendar year 2023F earnings per share of three sen.

“The IPO is expected to raise approximately RM17.2 million from the issuance of 81.8 million new shares. Besides utilising 34% of the proceeds for capital expenditure 23.3% and 25.2% of the proceeds are allocated for repayment of bank borrowings and general working capital respectively,” noted Public Investment.

The research outfit said MNHB’s venture into the execution of piped water and sewerage distribution projects, assembly of neutral disconnectors and securement of more large-scale solar substation projects will also contribute to the growth of the company.

MNHB leases machinery to supplement its existing assets in carrying out project works, including cranes, excavators and generator sets as the group does not own enough of these machineries and equipment. It also engages subcontractors for horizontal directional drilling (HDD) works and pipe jacking works, to supplement its operational resources, for the securing and delivery of more underground utilities engineering projects.

“Hence, MNHB believes that acquisition of six HDD machines, six lorries, one gas monitoring machine and three electric hydraulic pumps over the next 24 months upon listing, will place the group in an advantageous position to cater for underground utilities engineering projects of different scale and complexities,” Public Investment said.

While on the piped water and sewerage distribution projects, MNHB has capabilities under its underground utilities engineering services and solutions segment.

“The group’s engineering and design team have the technical know-how to execute piped water and sewerage distribution projects.

“Between the financial year 2018 (FY18) and the first four months of FY22, MNHB has completed six piped water and sewerage distribution projects, and as at March 9, 2022, the group has secured one ongoing piped and sewerage project,” said the research house.

The company has plans to continue to capitalise on this by focusing on the water and sewerage industries within 36 months of listing, while proactively growing its business opportunities in power, telecommunication and gas industries by expanding its scale of operations.

The group plans to enter joint ventures (JVs) with piped water contractors to participate in tendering of piped water projects.

At this juncture, MNHB has identified a potential JV partner which is a Construction Industry Development Board registered G7 piped water contractor to participate in joint tender of a piped water project. The scope of the piped water project is to provide water piping services in conjunction with the Integrated Water Supply Scheme in Kapar,” said the bank.

The company is also looking into leveraging its technical know-how and knowledge transfer from Lucy Asia Pacific Sdn Bhd.

It also looks into intensifying distribution activities and ventures into the assembly of neutral disconnectors for sales and distribution in Malaysia.

“In order to ensure that there is sufficient space to undertake assembling of neutral disconnectors and warehousing space for the storage of materials and parts as well as finished products, the group has rented a 11⁄2 storey factory unit with approximately 3,225 sq ft built-up at a light industrial park located in Sepang, Selangor, which is intended for the assembly of these neutral disconnectors. For the avoidance of doubt, the factory is presently vacant,” said the bank.