MORNING CALL: 1/12/23

Apex Securities values Critical Holdings at 40 sen to 43 sen

Transcript

00:00 Today we're taking a look at Ace Marketbound Critical Holdings.

00:05 Apex Securities in its IPO flashnote says the stock is fairly valued at between 40 cent

00:10 and 43 cent.

00:12 It did not rate the stock.

00:14 Critical is set to list on December 18th at 35 cent per share.

00:18 So what does Critical do?

00:19 It's primarily involved in the provision of mechanical, electrical and process utilities

00:24 solutions for Critical facilities.

00:27 It's bagged 37 MEP Engineering Solutions projects, with a combined contract value of

00:33 RM462.8 million over the past seven years.

00:37 The company is run by a strong management and technical team, whose members possess

00:41 more than 10 years' experience each.

00:44 Downsides?

00:45 Business is dependent on order book replenishment and supply and quality of services of its

00:49 subcontractors and suppliers.

00:52 Also noteworthy is Critical's customer concentration.

00:55 Revenue from its top five customers collectively accounted for approximately 46 to 68 percent

01:01 of total revenue for FY2020 to FY2023.

01:06 With an IPO price of 35 cent, its price to earnings ratio of 13.6 times for FY2023 is

01:12 lower against indirect peers, such as engineering services providers Kinergy Advancement and

01:18 Pansar.

01:19 So what does the street say?

01:21 At the moment, it looks like only Apex has an IPO note on Critical.

01:25 Fair value?

01:26 40 to 43 cent.

01:28 Critical is bound for the Ace market on the 18th of this month at 35 cent apiece.

01:33 [Music]