PETALING JAYA: ACE-Market bound Crest Group Bhd is expected to record earnings growth for three consecutive years, backed by business expansion plans and a better industry outlook, says TA Research.
In a report, the research house said the provider of imaging, analytical and test services is estimated to record earnings growth of 5%, 8.1% and 14.9% to RM22.1mil, RM23.8mil, and RM27.4mil for financial years 2024 (FY24), FY25, and FY26, respectively.
“All in, our FY24 to FY26 earnings projections are premised on the key assumptions of revenue growth of 10%, 12% and 13% and a gross margin of 28.5%, 28.6% and 28.8% for FY24, FY25, and FY26, respectively,” it stated.
Crest’s revenue and net profit growth, which are expected to be stronger moving forward, is viewed to be underpinned by the positive outlook for the imaging, analysis, and testing industry due to increasing demand from the electrical and electronics and semiconductor sectors.
TA Research also assigned a target price-earnings (PE) multiple of 18 times to Crest, arriving at a fair value of 50 sen per share.
The research house said this took into consideration the group’s proven track record in provision of imaging, analytical and test solutions, a strong network of equipment partners and suppliers, and an experienced management team.
Crest is mainly involved in the provision of imaging, analytical and test solutions that are mainly used for quality inspection, sample analysis as well as research and development.
The group currently operates in Malaysia, China, Singapore and Thailand, and is expected to expand its business to Vietnam after its listing.
Scheduled to list on the ACE Market of Bursa Malaysia on Oct 9, 2024, Crest aims to raise RM45.75mil from its initial public offering (IPO) exercise. The IPO entails a public issue of 130.71 million new ordinary shares and an offer for sale of 103.89 shares at a price of 35 sen per share.
Crest will utilise the proceeds for setting up a new centralised headquarters in Selangor, business expansion, purchase of additional demonstration equipment, expansion of its technical support and maintenance team as well as for listing expenses.
On the group’s financials, TA Research said that Crest’s revenue for FY23 had grown by 10.2% year-on-year (y-o-y) to RM187.6mil, which was mainly driven by higher sales in Thailand and China.
The rise in turnover, together with better gross profit margins, led Crest’s core net profit to surge 12.8% y-o-y to RM21mil.
“According to a report prepared by Smith Zander, which was enclosed in the IPO prospectus, the imaging, analysis and testing industry in Malaysia grew from RM4.3bil in 2020 to RM7.3bil in 2023 at a compound annual growth rate of 18.7%,” it said.
