ACE Market-bound Enest Group Bhd has been assigned a fair value of 16 sen per share by Malacca Securities Sdn Bhd, implying a 23.1% upside over its IPO price of 13 sen, underpinned by earnings expansion potential from downstream integration and export growth.
According to the research house, the valuation is based on a 10 times FY27F price-to-earnings multiple, which it noted is below the broader consumer discretionary sector range of 14.4 times to 22.7 times, but justified by Enest’s smaller market capitalisation of RM75.6 million.
Malacca Securities said a key growth catalyst identified is Enest’s planned shift toward in-house bottled bird’s nest production, following the relocation of its Kajang facility.
While processed bird’s nest products currently contribute only 0.8% of revenue and are fully outsourced, the group is developing a dedicated bottling line with a maximum capacity of 300,000 bottles annually.
Malacca Securities said the move is expected to improve margins once operations commence in 2Q29, as Enest gains full control over cooking, bottling and labelling of its value-added products, reducing reliance on third-party manufacturers.
The research house also highlighted Enest’s expanding trading segment, where raw unclean bird’s nest (RUBN) trading surged from RM2.9 million in FY22 to RM56 million in FY25, accounting for 35.3% of revenue.
Post-listing, Enest plans to expand into direct RUBN exports to China, leveraging a supplier network of around 940 registered swiftlet houses in Malaysia, while also deepening exports of raw cleaned edible bird’s nest (RCEBN) to higher-value customers, including traditional Chinese medicine and wellness manufacturers.
Malacca Securities noted that the group’s GACC registration acts as a regulatory moat, given its requirement for most food and beverage exports into China.
Furthermore, the research house said the transition from the LEAP Market to the ACE Market is expected to broaden Enest’s investor base beyond sophisticated investors to include retail and institutional participation, improving liquidity and market visibility.
However, Malacca Securities flagged several structural risks, including reliance on China’s GACC export framework, which governs 63%-92% of revenue exposure, as well as potential disease-related disruptions such as avian influenza or Newcastle disease, which have previously triggered export suspensions.
Raw material volatility also remains a key margin risk, with RUBN costs accounting for 95.1% of total cost of sales in FY25.
