Mercury Securities has made a “Subscribe” recommendation for YX Precious Metal Bhd with a target price of RM0.34 based on FY23F EPS of 2.4 sen and a PE of 14.3x which is 40% discount to the industrial sector 5-year average PE. The IPO Price is 28 sen
The stockbroking firm said that it likes the stock for its attractive expansion plans, and cheap valuations. The target price represents a potential return of 21.4% over the IPO price.
It said that the company has more than 12,000 stock-keeping units (SKUs), better positioned to meet varying customer demands.
YXG also offers customers the option to purchase gold jewellery in small quantities with a mix of different designs, offering convenience for small retailers. “This enables the company to cultivate customer loyalty, retain an established customer base and attract new customers. As of 2021, the company managed to secure a market share of 6.1% and 1.8% from the jewellery wholesale and manufacturing industry in Malaysia,” it said
On its market reach and customer base, It said that it has a diversified market reach and strong customer base. The company has approximately 315 customers as of FYE 2021, spanning across markets in Malaysia, and export markets such as Singapore, Germany, Myanmar, and Hong Kong. In FYE 2021, approximately 98.0% or 310 customers are resellers, 2% or 5 customers are jewellery manufacturers, and 79% or 250 customers have a long-standing relationship with YXPM for more than 6 years.
