KUALA LUMPUR: Public Investment Bank (PublicInvest) research has attached a fair value of 43 sen to Critical Holdings Bhd, a 22 per cent premium to its initial public offering price of 35 sen.
The mechanical, electrical and process utilities (MEP) design and engineering solutions company is en-route to an IPO on the ACE market.
Critical Holdings plans to raise about RM26.0 million from the issuance of 74.3 million new shares in its IPO.
The company will use 46 per cent of the proceeds for business expansion, while 38.1 per cent of the proceeds are allocated for working capital requirements.
In order to better support its future expansion to the central and southern regions of Peninsular Malaysia, Critical Holdings intends to acquire and set up its new regional office in the central region of Peninsular Malaysia within the next 24 months upon listing.
Apart from that, Critical Holdings plans to expand the group's sales and technical team to
support existing and anticipated business growth, and purchase new technician tools, engineering tools, software and motor vehicles to support its business expansion and replacement of fully depreciated engineering tools.
PublicInvest research said Critical Holdings' growth will be driven by expansion of its scale of operations, and workforce.
Its competitive strengths include provision of comprehensive MEP engineering solutions, adherence to stringent quality, safety and environmental standards, qualified and experienced key senior management team, and wide client network and established relationships with its subcontractors and suppliers.
Key drivers may include growth of end-user industries; corresponding investment; increased outsourcing and relocation of electrical and electronics (E&E) manufacturing activities to Southeast Asia; growth prospects of the semiconductor and electronics ecosystem in Penang, and economic and property growth.
Key downside risks include competitive industry, dependency on the end-user markets of its clients, potential project cost overruns, project delays and credit risk, dependency on its major customer, and dependency on its subcontractors.