KUALA LUMPUR: Rakuten Trade Sdn Bhd has a "buy" rating for ACE Market-bound Crest Group Bhd with a fair value (FV) of 46 sen, 31 per cent higher than its initial public offering (IPO) price of 35 sen.
The research firm said that the equipment and services provider for imaging, analytical, and testing solutions serves a broad customer base, with a median relationship length of 10 years.
"The semiconductor industry has been a leading contributor amongst the six key sectors, accounting for 15.3 to 25.9 per cent of the group's revenue from financial year 2020 to 2024 (FY20-24)," it said in a research note.
Rakuten Trade expects Crest Group's earnings compound annual growth rate (CAGR) of 8.5 per cent for FY23-FY26, underpinned by regional expansion, growth across various industries, and governmental support.
The group is currently in a net cash position.
According to the firm, the group's growth strategy focuses on expanding its regional footprint by building a team in Vietnam, strengthening its team in Bangkok, and opening new branches in China.
"This expansion aims to better serve both existing and potential customers while building a larger services and support team to handle increasing demand," it added.
Crest Group also plans to set up a new headquarters in Selangor, with an estimated capital expenditure of RM23.6 million, to optimise and streamline operations.
Furthermore, the purchase of the latest demonstration equipment, including three units of X-ray imaging equipment and three units of sample management equipment, highlights a strong commitment to staying ahead of technological advancements and meeting customers' needs.
"Malaysia's imaging, analysis, and testing industry is poised for growth, driven by the progress across various industries and rising adoption of Internet of Things (IoT) and Industry 4.0 technologies.
"The industry grew from RM4.3 billion in 2020 to RM7.25 billion in 2023, achieving a CAGR of 18.72 per cent. The key industry coverage, semiconductor and E&E industries, is expected to remain robust and favourable," Rakuten Trade said.