KUALA LUMPUR (Sept 30): PublicInvest Research has derived a fair value of RM1.41 for AME Elite Consortium Bhd based on an 11x PE multiple to its FY2020F EPS of 12.8 sen.
In an initial public offering (IPO) note today, the research house said the IPO is expected to raise approximately RM111.1 million from the issuance of 85.4 million new shares.
It said besides utilising 62.2% and 20.7% of IPO proceeds respectively for industrial property development and potential joint ventures as well as working capital for AME’s i-Park @ SAC development project, 8.1% of the proceeds is allocated to complete the expansion of AME's precast concrete fabrication capacity, that are earmarked for future growth.
“Key drivers may include: i) growth in the manufacturing sector that boosts the demand for industrial construction activities, ii) growth in the electronic commerce (e-commerce) sector that leads to demand for warehousing facilities, iii) well-developed infrastructure that lifts the demand for local industrial properties and eventually industrial construction service, iv) governmental economic plans that spur growth for development and construction of industrial property,” it said.
The research house said key downside risks, among others, include i) dependency on the performance of the property market and foreign direct investment (FDI) in Malaysia, ii) dependency on availability of adequate financing in capital intensive business, iii) fluctuations in the market value of properties may affect profitability, iv) possibility of cost overrun, and v) dependency on ability to secure new contracts.
