HE Group Bhd (HEGROUP) is an electrical engineering service provider focusing on the provision of power distribution systems for end-user premises such as industrial plants, as well as industrial and commercial substations, serving largely manufacturers in the semiconductor, medical devices and electronic product industries. Besides that, HEGROUP is also involved in other building systems and works including mechanical systems, control and instrumentation systems, civil, structural and architectural works, together with electrical equipment hook-up and retrofitting services. In 2022, HEGROUP was appointed by Vertiv (Malaysia) S/B, an American provider of power, cooling and information technology (IT) infrastructure for data centres, communication networks, and commercial and industrial facilities, to become one of their authorised product reseller and service provider on a non-exclusive basis for Vertiv products in Malaysia.
Moving forward, apart from establishing physical offices in Kedah and Johor, HEGROUP plans to hire a team of mechanical engineers, chemical engineers, and process engineers with experience in designing and engineering mechanical and process utility systems to develop this expertise in-house. In addition, HEGROUP plans to expand its end-user industry coverage to include data centres while becoming an integrated mechanical, electrical and process utility (MEP) engineering service provider. We derive a fair value of RM0.38 based on a 15x PE multiple to its FY24F EPS of 2.5sen. The IPO is expected to raise approximately RM24.3m from the issuance of 86.9m new shares. Besides utilising 15.0% and 7.2% of the proceeds for business expansion and capital expenditure, respectively, 62.2% of the proceeds are allocated for working capital.
Source: PublicInvest Research - 18 Jan 2024