M+ has assigned a FAIR VALUE of 50 sen for ACE Market bound ES Sunlogy Bhd, an advance of 66.7% from ES Sunlogy’s IPO price of 30 sen. ES Sunlogy, set to debut on the ACE Market of Bursa Malaysia on Feb 20, 2025, aims to raise RM42 million via an IPO of 140 million new ordinary shares at a price of 30 sen apiece.
In an IPO note, M+ said the valuation is based on a price-earnings (P/E) multiple of 19 times pegged to the group’s FY26F earnings per share of 2.63 sen.
“We believed that the ascribed P/E is fair as the peer average 12-months forward P/E and historical average P/E stood at 13.8-19.7 times,” M+ added.
M+ shared that ES Sunlogy plans to develop a 29.99MW Selarong LSSPV Plant in Kulim, Kedah, under the Corporate Green Power Programme (CGPP), through a joint venture with Blazing Solar (30%) and TRe (30%) via Selarong Pertama.
“The plant will be connected to the utility grid via the PMU Kulim substation, with RM14.1 (33.6% IPO proceeds) allocated to fund its construction.
“Once the plant commences its operation, it is expected to contribute significant revenue to the group’s renewable energy segment,” M+ said, adding that it is projecting three-year earnings compounded annual growth rate of 15.4% for ES Sunlogy, with core profit after tax anticipated to reach RM16.1 million to RM20.8 million over the next three years.
“This growth is underpinned by larger contracts secured in the mechanical and electrical engineering segment due to its G7 contractor status, the commencement of Selarong LSSPV Plant in Kulim, Kedah, by December this year, and the active participation in LSS5 programme,” M+ said.
In terms of revenue, M+ said the group reported a 39.8% year-on-year revenue growth, rising from RM136.7 million in FY23 to RM191.1 million in FY24, driven by contributions from all three business segments.
Among the investment risks involved for ES Sunlogy according to M+ are the group’s reliance on registrations, approvals, licences and permits; the risk of securing new contracts; cost overruns; defect liability claims and heavy reliance on a single corporate client for CGPP.
