KUALA LUMPUR: Malacca Securities has a fair value of 68 sen for bus and rail information technology services provider, Go Hub Capital Bhd, almost double that of its initial public offering price of 35 sen a share.
Go Hub is due to be listed on the ACE Market tomorrow, July 3, 2024.
"We derived a fair value of 68 sen for Go Hub. Our fair value is derived by pegging a price per earning ratio (P/E) of 24 times to the FY2 earning per share of 2.84 sen. We believe a forward P/E of 24 times is justified as the selected peer's average forward P/E stood at 23.7 times," it said in its note today.
Go Hub Capital Bhd's core net profit is expected to grow at 24.5 per cent to RM8.8 million for the financial year 2024 (FY24), said Malacca Securities Sdn Bhd.
In FY23, Go Hub core net profit increased 17.0 per cent year on year (YoY) to RM7.1 million despite a significant topline improvement to RM43.9 million.
This was mainly due to the increase in revenue from the centralised ticketing system (CTS) rail segment and a new contract secured in the automatic fare collection (AFC) segment.
For FY24, Malacca Securities projects the topline to see further improvement to RM48.3 million, supported by the potential project wins from the transportation industry.
"Meanwhile, we expect core net profit to grow to RM8.8 million and RM11.4 million for FY24 to FY25, coupled with tapping into the large addressable market as many terminals have yet to integrate IT components with the terminal systems. "Furthermore, we should see potentially stronger ridership in public transport in line with the increasing car ownership costs and worsening traffic conditions," it said in a note.
Based on the prospectus, Malacca Securities said Go Hub's unbilled orderbook stood at RM35 million.
The firm expects Go Hub will be able to get decent contract awards within the transportation sector, eventually boosting the top and bottomline.