TA Securities favors CPE Technology Bhd (CPE) for its rich margins and medium-to-long term earnings growth prospects, which is backed by its customers’ exposure to the growing semiconductor and life science and medical technology industries.
“Additionally, we have also taken into account the group’s strong customer relationship, experienced and knowledgeable management team, and established track record,” it said in its note today (Nov 23).
The research house highlighted the group’s IPO price of 1.07 per share, where CPE is priced at a trailing PE of 22.4x CY22 EPS.
“As we ascribe a target PE multiple of 25x against its CY24F EPS, we derive a fair value of RM1.13 per share,” it said.
TA Securities noted that the IPO entails a public issue of 167.8 million new shares and offer for sale of 67.1 million existing shares.
“Collectively, they account for 35% of the group’s enlarged issued share capital,” it said.
CPE, which was founded in 1985, is an engineering supporting services provider, which is principally involved in manufacturing of precision machined parts and components, and provision of computer numerical control (CNC) machining services.
The deliverables to customers usually take the form of customised metal piece parts, which they use to produce finished products in various industries.
Its competitive advantage include long-standing relationship with customers, experienced and knowledgeable management team, ISO Class 5 and 6 cleanroom conditions, customers from different countries and industries such as semiconductor, life science and medical devices, as well continuous investment in machinery and equipment.
Today, CPE operates in four factories in Johor, Malaysia with a built-up area of 109,000 sq ft supported by 650 employees in Malaysia and 21 employees in Singapore.
