• MYR0.61 FV based on 12x FY25F P/E. Winstar Capital aims to raise MYR19.8m from its IPO to expand production capacity and its working capital. The group is set to benefit from the growth in construction and solar photovoltaic (PV) industries. To meet the expanding aluminium demand, Winstar plans to increase its production capacity by 128% in 2025-2026. With a 39.6% earnings CAGR (2023-2026), its FY25F P/E of 6x is attractive.

• Enabling sustainable construction solutions. With over two decades of expertise in the aluminium extrusion market, Winstar offers an extensive portfolio of approximately 4,900 SKUs, spanning extruded aluminium profiles and building materials. Trusted by over 3,000 customers, its customisable solutions are integral to the thriving construction sector, projected to grow at a 5.32% CAGR (2024-2028). Positioned in a booming industry, the Malaysian aluminium extrusion market is set to expand from MYR3.22bn in 2023 to MYR4.69bn by 2028, at a robust 7.81% CAGR (Protégé Associates).

• Breakthrough in solar photovoltaic (PV) solution. As of October 2024, Winstar secured MYR11.11m in orders for aluminium solar PV mounting structures and accessories, with MYR4.76m from third parties and the rest from Fabulous Sunview. This is 10x its FY23 solar PV service revenue. Under the National Energy Transition Roadmap (NETR) initiatives, Malaysia’s RE share is set to rise from 4% in 2023 to 22% by 2050, driven by c.56 GW of solar PV installations.

• Boosting production by 128%. The group currently operates four aluminium extrusion lines with a total capacity of 6,705 tonnes, with three lines running near full optimisation. To meet growing demand, it plans to add four new extrusion lines, boosting its total manufacturing capacity by approximately 128% to 15,285 tonnes annually. The first two additional lines are slated for commissioning by 3Q25, with the remaining two expected to be operational by 2Q26.

• Forecasts and valuation. We project a 3-year earnings CAGR of 39.6% and ascribe a 12x P/E to its FY25F earnings to derive our MYR0.61 FV. The valuation is in line with the 12.2x 1-year forward P/E of its international peers.

• Key risks involve dependence on major supplier, shortage of labour, slowdown in construction or solar PV industries, fluctuation in aluminium prices, and operational risks.

Source: RHB Securities Research - 3 Dec 2024