Winstar Capital Bhd (WINSTAR) operates in the midstream and downstream segments of the aluminum industry, focusing on extrusion, fabrication and assembly of extruded aluminium profiles into aluminium ladders, as well as trading of building materials such as extruded aluminum profiles, stainless steel products, aluminium products, silicon sealants, ironmongery products, among others. The Group has also ventured into trading of solar-related materials and provision of solar photovoltaic (PV) system installation services, leveraging the expertise and projects of its corporate shareholder, Sunview Group Bhd. Its emergence as WINSTAR's corporate shareholder positions the Group for growth in the solar PV industry. Notably, WINSTAR has begun to fabricate aluminium solar PV mounting structures for the installation of solar PV systems in early 2024.

WINSTAR is expanding its manufacturing capacity for aluminium extrusion with an 80,000 sqft facility, set to increase annual capacity to 15,285 tonnes by FY26 (6,705 tonnes per annum currently). The Group is also growing its solar PV product line, fabricating mounting structures and accessories in-house. As at 30 Oct 2024, the group secured RM11.1m in purchase orders for these products. We derive a fair value of RM0.48 based on an 13x PE multiple to its FY25F EPS of 3.7sen. The IPO is expected to raise approximately RM19.8m from the issuance of 56.6m new shares. 48.3% and 31.5% of the proceeds are allocated for capital expenditure and working capital, respectively.

• Growth drivers. WINSTAR's growth will be driven by expansion of: i) construction of new manufacturing facilities, and ii) expansion of extruded aluminum products for the solar PV industry.
• Competitive strengths. WINSTAR's competitive strengths include: i) established track record, ii) comprehensive manufacturing facility, iii) wide range of products offering, and iv) experienced management team.
• Catalysts. Key drivers may include: i) increasing demand and utilisation of aluminium extrusion products by various end-user industries, ii) support from government, and iii) technological advancements.
• Key risks. Key downside risks, among others, include: i) competition, ii) fluctuation in the price of aluminium billets, iii) dependency on its major supplier, and iv) labour intensive operations.

Source: PublicInvest Research - 3 Dec 2024