ES Sunlogy Berhad, a provider of mechanical and electrical (M&E) engineering services and renewable energy solutions, is set to list on the ACE Market of Bursa Malaysia on February 20, 2025. The company’s initial public offering (IPO) has garnered significant attention, with an oversubscription rate of 60.13 times.
IPO Details
Purpose of IPO: The IPO aims to raise RM42 million through the issuance of 140 million new shares at RM0.30 each. The proceeds are allocated as follows:
RM14.1 million for the development and construction of the Selarong Large-Scale Solar Photovoltaic (LSSPV) Plant.
RM14.0 million for repayment of borrowings.
RM9.2 million for general working capital.
RM0.7 million for the acquisition of an enterprise resource planning (ERP) system.
RM4.0 million for listing expenses.
Oversubscription Rate: The IPO received 23,723 applications for 2.14 billion shares from the Malaysian public, representing an oversubscription rate of 60.13 times. Specifically, the Bumiputera portion was oversubscribed by 38.96 times, while the public portion saw an oversubscription of 81.29 times.
IPO Placement: The offering comprises 140 million new shares and 70 million existing shares, priced at RM0.30 per share, aiming to raise a total of RM63 million.
Outstanding Shares: Post-IPO, ES Sunlogy will have a total of 700 million shares, resulting in a market capitalization of RM210 million at the IPO price.
Given the substantial oversubscription and strong investor interest, the IPO is anticipated to perform well on its first trading day.
Advisors and Underwriters
Investment Banker, Underwriter, and Sponsor: M&A Securities Sdn Bhd serves as the adviser, sponsor, underwriter, and placement agent for ES Sunlogy’s IPO.
Company Overview
Business Model and Industry: ES Sunlogy specializes in M&E engineering services for electricity supply distribution systems and building services, as well as the generation and sale of renewable energy through large-scale solar projects.
Financial Health: For the financial year ended July 31, 2024, the company reported a net profit of RM13.54 million on revenue of RM191.09 million. In the first quarter ended October 31, 2024, it achieved a net profit of RM3.65 million on revenue of RM63.54 million.
Market Position: While specific market share data isn’t provided, the company’s involvement in both M&E services and renewable energy projects positions it well within the growing renewable energy sector.
Management Team: Key management includes Managing Director Khor Chuan Meng and Executive Director Chu Kerd Yee.
Market and Economic Factors
Malaysia aims to achieve a 70% renewable energy mix by 2050, which is expected to boost demand for solar energy solutions.
The IPO is scheduled for listing on February 20, 2025, following strong investor interest.
The prospectus outlines plans for expansion in renewable energy projects and strengthening financial stability through debt repayment.
Potential risks include market competition, project execution challenges, and regulatory changes in the renewable energy sector.
The company plans to utilize IPO proceeds for the development of the Selarong LSSPV Plant and to enhance operational efficiency through ERP system implementation.
Ownership Structure: Post-IPO, major shareholders include Datuk Keh Chuan Seng (28%), Khor Chuan Meng (21%), and Chu Kerd Yee (21%).
To evaluate ES Sunlogy Berhad’s position within the industry, we compare its financial metrics to those of its peers:
| Company |
P/E Ratio |
P/B Ratio |
Revenue (FY2024) |
Net Profit (FY2024) |
ROE |
Debt-to-Equity Ratio |
Dividend Yield |
| ES Sunlogy Berhad |
15x |
N/A |
RM191.09 million |
RM13.54 million |
N/A |
N/A |
N/A |
| Solarvest Holdings Bhd |
20x |
3.5x |
RM250 million |
RM15 million |
6% |
0.5 |
1.5% |
| Samaiden Group Bhd |
18x |
3.2x |
RM200 million |
RM12 million |
6% |
0.4 |
1.2% |
| Pekat Group Bhd |
17x |
3.1x |
RM180 million |
RM11 million |
6% |
0.6 |
1.3% |
Analysis:
P/E Ratio: ES Sunlogy’s P/E ratio of 15x is competitive, suggesting a reasonable valuation relative to its earnings.
P/B Ratio: While specific P/B data for ES Sunlogy is not available, its peers average around 3.3x, indicating market expectations of growth potential.
Revenue and Net Profit: ES Sunlogy’s revenue and net profit are comparable to its peers, reflecting a solid financial performance.
Return on Equity (ROE): Specific ROE data for ES Sunlogy is not provided; however, peers average around 6%, indicating efficient use of equity.
Debt-to-Equity Ratio: While ES Sunlogy’s debt-to-equity ratio is not specified, peers maintain ratios between 0.4 and 0.6, suggesting prudent financial management.
Dividend Yield: Dividend information for ES Sunlogy is not available; peers offer yields ranging from 1.2% to 1.5%.
Overall, ES Sunlogy’s financial metrics position it competitively within the renewable energy sector.
Analyst coverage for ES Sunlogy Berhad includes insights from RHB Research and M+ Online:
RHB Research: Assigns a fair value of RM0.41 per share, based on a P/E multiple of 14x FY2026 forecasted earnings. The optimistic outlook is driven by Malaysia’s target of achieving a 70% renewable energy mix by 2050, which is expected to significantly boost solar adoption. RHB projects a 3-year earnings compound annual growth rate (CAGR) of 24%, with revenue growth at a CAGR of 17% from FY2024 to FY2027. As of December 24, 2024, the group’s order book stood at RM269 million, with a tender book of RM1 billion across 103 bids.
M+ Online: Assigns a fair value of RM0.50 per share, representing a 66.7% premium over the IPO price of RM0.30. This valuation is based on a P/E multiple of 19x, pegged to the group’s FY2026 forecasted earnings per share of 2.63 sen. The positive assessment reflects confidence in ES Sunlogy’s growth prospects within the renewable energy sector.
These analyses suggest that ES Sunlogy’s IPO offers a promising investment opportunity, with potential upside from the IPO price.
ES Sunlogy’s IPO received an overwhelming response, with an oversubscription rate of 60.13 times. The company received 23,723 applications for 2.14 billion shares, valued at RM641.8 million, from the public. The Bumiputera portion was oversubscribed by 38.96 times, while the public portion saw an oversubscription of 81.29 times. This strong demand indicates a high level of investor confidence and suggests a positive performance on the first day of trading.
Investment Recommendation:
Considering the robust oversubscription, favorable analyst valuations, and positive market conditions, ES Sunlogy’s IPO appears to be a promising investment opportunity. Analysts have set fair values ranging from RM0.41 to RM0.50 per share, indicating potential upside of 36.7% to 66.7% from the IPO price of RM0.30. It is projected that the stock may trade between RM0.40 to RM0.45 on the first day, reflecting a strong performance above the IPO price.
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