Winstar Capital Berhad’s share price has recently seen a retracement from its highs, reflecting a broader market slowdown and cautious sentiment among investors. Despite this, the company’s fundamentals remain solid, with RHB Research ascribing a fair value (FV) of MYR0.61 per share based on a 12x FY25F price-to-earnings ratio (P/E).
The current pullback could present a compelling entry point for investors, especially considering the growth prospects in the construction and solar photovoltaic (PV) sectors.
Winstar Capital, a leading player in the aluminium extrusion market, has a diverse portfolio of approximately 4,900 stock-keeping units (SKUs) used in construction and solar PV mounting solutions.
With over 20 years of experience and a strong customer base of over 3,000 clients, Winstar is strategically placed to benefit from the projected 5.32% CAGR (2024-2028) growth in Malaysia's construction sector. Furthermore, the aluminium extrusion market is expected to expand at a robust 7.81% CAGR, growing from MYR3.22bn in 2023 to MYR4.69bn by 2028, offering Winstar significant opportunities for growth.
Additionally, the company’s expansion into solar PV solutions has proven to be a game changer. As of October 2024, Winstar secured MYR11.11m in solar PV mounting structure and accessory orders, marking a substantial increase compared to its FY23 performance. With Malaysia's renewable energy share set to grow under the National Energy Transition Roadmap (NETR), Winstar is well-positioned to benefit from the projected surge in solar PV installations.
To meet the increasing demand for its aluminium products, Winstar plans to increase its production capacity by a staggering 128%. The group’s current capacity of 6,705 tonnes will expand to 15,285 tonnes annually with the addition of four new aluminium extrusion lines, slated for commissioning between 3Q25 and 2Q26. This strategic expansion positions the company to cater to both the construction and renewable energy sectors, driving robust financial growth.
RHB forecasts a 3-year earnings CAGR of 39.6% (2023-2026), supported by this capacity expansion and rising demand. At a FY25F P/E of 6x, Winstar is attractively valued compared to its peers, with the MYR0.61 FV reflecting its growth potential in a booming industry.
Conclusion:
While short-term market sentiment has pressured Winstar Capital’s share price, its long-term growth story remains compelling. With a focus on sustainable construction and renewable energy solutions, the company is poised to benefit from strong industry tailwinds. The current retracement presents an opportunity for investors to consider this undervalued stock, supported by RHB's optimistic target price of MYR0.61.