Malacca Securities Sdn Bhd has assigned a fair value of 26 sen per share to ACE Market-bound RT Pastry Holdings Bhd, implying a 44.4% upside from its IPO price of 18 sen.
The valuation is based on a price-to-earnings (P/E) multiple of 12 times pegged to the bakery chain operator’s forecast FY27 earnings per share of 2.15 sen.
In an IPO note, the research house said RT Pastry’s planned expansion of 16 new outlets over the next four years would be the key growth driver, nearly doubling its retail footprint from the current 17 outlets. The group has earmarked RM7.6 million from IPO proceeds for the rollout.
Malacca Securities also highlighted growth potential in RT Pastry’s wholesale business, which contributed only 2.9% of FY2025 revenue. The segment is expected to benefit from a distributorship agreement with HWC Coffee and the establishment of a dedicated wholesale unit, Ascend Rise Hub Sdn Bhd.
The research house noted that RT Pastry’s centralised manufacturing model has supported margin expansion, with gross profit margins improving to 35.4% in FY25 from 33.5% in FY22 through procurement efficiencies and tighter cost controls.
RT Pastry also enters its listing with a strengthened balance sheet after reducing total borrowings to RM11.8 million in FY25 from RM22.5 million a year earlier, turning net cash positive at RM4.6 million. A further RM3.8 million of IPO proceeds will be used for debt repayment.
For FY25, the group reported revenue of RM60.3 million and adjusted core net profit of RM5.3 million. Malacca Securities forecasts a three-year earnings compound annual growth rate of 16%, with core profit expected to rise to RM8.2 million by FY28.
The research house said RT Pastry is well-positioned to expand its market share from the current 2% of Malaysia’s RM3 billion bakery market through outlet expansion in the Central, Southern and East Coast regions.
However, it cautioned that continued weakness in same-store sales growth, execution risks surrounding new outlet openings and volatility in raw material costs could weigh on the group’s earnings outlook.
