• Glostrext Berhad (Glostrext) is a geotechnical instrumentation service provider which provide piling, structural and geotechnical related services, covering instrumentation, testing and monitoring services to construction projects as well as completed buildings and infrastructure.

• With more than three decades of experience, the Group specializes in providing pile instrumentation, static load test services, structural and ground instrumentation, and monitoring solutions. Besides, their main activities revolve mainly around Malaysia and Singapore.

• It plans to expand its structural and ground instrumentation and monitoring services to Singapore leveraging on the latter’s mandatory requirement for all construction of buildings and infrastructure beginning 2008.

• We derived a fair value of RM0.18 for Glostrex, based on weighted average small-cap construction peers forward PE of 17.7x, pegged to its FY23 EPS of 1sen. Note that the management did not provide any guidance on its financial outlook.

Enhancing its Services in Singapore

Glostrext predominantly provides pile instrumentation and static load test services to clientele based in Malaysia and Singapore. However, their structural and ground instrumentation, alongside monitoring services, are presently concentrated exclusively on the Malaysian customer base. This is a result of the company's constrained human resources for conducting sales, marketing, and operations of these services in Singapore. Nonetheless, the company plans to broaden its service scope to the Singaporean market, utilizing the proceeds from the IPO. This strategic move, however, aligns with Singapore's Building Control Regulation of 2003, which mandates structural and ground instrumentation as well as monitoring for all construction of buildings and infrastructure in Singapore effective 2008.

Elevate Service Offerings through R&D Initiative

Glostrex is driving the adoption of off-site structural and ground instrumentation and monitoring services through their in-house Glostrex WiNA platform. This aligns with the prevailing trend, as numerous businesses and enterprises are pursuing automation to enhance operational efficiency and decrease dependence on manpower. The current research and development (R&D) efforts involve enhancing the Glostrext WiNA platform, which began in the 2Q23 and is projected to conclude by 4Q25. This includes both the refinement of the Glostrext WiNA platform as well as potential modifications and configurations.

Key Risk

Glostrex’s business operation in Singapore is dependent on its existing Builder’s Licence (Site Investigation Work) issued by Building and Construction Authority (BCA) which will expire on 7th June 2025. On the 30th June 2022, Singapore Accreditation Council (SAC) has mandated all registered specialist builders for Instrumentation and Monitoring to be accredited by SAC to renew its licence. Should the company is unsuccessful to secure the accreditation, it may only focus on pile instrumentation and static load test services in Singapore as this scope of service is not subject to accreditation by SAC.

Source: BIMB Securities Research - 14 Aug 2023