PETALING JAYA: One of the most promising prospects of EPB Group Bhd is its initiative involving robotic solutions for food processing and packaging that is aimed at mitigating labour shortages.
Given the promising outlook for increased demand across various countries, including Malaysia, Apex Research believes EPB will emerge as a primary beneficiary in the food processing and packaging machinery sector.
ACE Market-bound EPB is an integrated food processing and packaging player, which has been established for over three decades.
At an initial public offering (IPO) offer price of 56 per share, EPB’s forward price earnings ratio (PE) valuation for financial year 2024 (FY24) and FY25 is projected at 15.6 times and 11.7 times.
This is based on Apex Research’s estimated FY24 and FY25 earnings per share (EPS) of 3.6 sen and 4.8 sen respectively.
The research house arrived at a fair value of 66 a share or 17.9% potential upside from EPB’s IPO price by assigning a target PE of 14 times to its FY25 EPS. In FY23, EPB’s revenue was RM122.1mil and pre-tax profit RM19.2mil. This was driven by growth across all three business segments.
The food processing and packaging machinery solutions segment took the largest slice with 82.3% of total revenue (RM100.5mil) which expanded 38.5% year-on-year, boosted by increased overseas sales and enhanced automation. Apex Research expects a core net profit of RM13.3mil in FY24. Meanwhile, EPB’s markets include Malaysia, Indonesia and the Philippines.
The research house likes EPB for its growth prospects, which is supported by rising demand in the frozen food market, expansion initiatives to ramp up production capacity, integration of robotic technology and software development and strong foothold in regional markets.
EPB’s primary operational facilities, including its main factory, office, warehouse and showroom, are located at Plant 1 in Penang. Spanning 28,335 sq ft, Plant 1 is designated for fabricating and assembling food processing and packaging machinery.
