Making its debut on the Ace Market today, Siab Holdings Bhd (“Siab” or “the Group”) is a building construction services provider. To complement the Group’s principal activities, Siab also provides ICT solutions services. Siab has a diverse project mix comprising of commercial buildings (office towers and shopping complexes), hotels, institutional buildings (hospitals), industrial buildings (warehouse and factory) and residential buildings such as high-rise condominiums and serviced apartments. BUY with a target price of RM0.37 based on 12.5x PER FY22 (in line with average peers’ CY22 PER), premised on its solid track records, aggressive expansion plans, earnings visibility, recovery on construction industry and its healthy balance sheet.

Established since 1984, Siab is registered under G7 contractor with CIDB with an extensive portfolio of completed jobs with contract value totalling RM1.49bn. The Group has also completed three design and build projects namely the Hospital Bentong Project, The Pines Project and the F&N Intelligent Industrial Building Project. In addition, the Group has established its own quality, environment, safety and health (“QESH”) management system which have been assessed and accredited the ISO9001:2015, ISO14001:2015, and ISO45001:2018.

It is estimated that the Malaysian construction industry is to expand by 11.5% in 2022 from 2021’s low base. The industry is then forecasted to experience an annual growth rate of 6.5% - 9.5% for the period from 2023 to 2025.

As part of its expansion plan, the Group has allocated RM6.1m for the purchase of land in Klang Valley and construction of a storage facility. This allows the Group to accommodate and undertake maintenance works of its new and existing construction machinery and equipment that are not in use at its construction sites. With the additional capacity for storage, Siab plans to purchase new construction machinery and equipment with RM13.13m of its IPO proceeds. This will increase its operational capacity and enable the Group to tender for construction projects with higher value and its expansion into infrastructure projects. In addition, the Group intends to purchase BIM system software to contribute to efficient project management.

The Group has a healthy balance sheet with net cash of RM41.55m post IPO. Amid the recovery of the local construction industry and Siab’s aggressive expansion plan, we expect Siab to register net profit of RM14.5m and RM11.5m for FY22 and FY23 respectively.

Source: Rakuten Research - 28 Feb 2022