Background

Critical Holdings Berhad (Critical Holdings) is specialised in mechanical, electrical and process utilities solutions, and services and maintenance for critical facilities such as plantrooms, cleanrooms, and data centres.

IPO Statistic

The IPO entails a public issue of 74.3mn new shares and offer for sale of 37.2mn existing shares. Collectively, the share offers account for 30.0% of the group’s enlarged issued share capital.

Competitive Advantages

1. Experienced & knowledgeable key management and projects team.

2. Long-lasting relationship with clients and suppliers.

3. Adhere to industry standards & posses with international certifications.

Valuation

At the IPO price of RM0.35/share, Critical Holdings is priced at a trailing PE of 11.7x against its FY23 EPS. As we assign a target PE of 11x against its CY24 EPS, we derive a fair value of RM0.39/share. This takes into account the group’s proven track record with consistent profits over the past 4 years, ability to secure new jobs and ongoing orderbook of RM265mn as at 29 October 2023. Not Rated.

Business Overview

Established in 2011, Critical Holdings Berhad is an engineering services provider which is principally involved in Mechanical, electrical and process utilities (MEP) engineering solutions, and maintenance and services. The group operates as a main contractor to deliver services such as design and build, project management, supply, installation, testing and commissioning of MEP system for newly or existing critical facilities. Meanwhile, the group also acts as a subcontractor as well to support their clients by carrying out engineering works. Critical Holdings focuses on full cycle of services including a 24/7 service support to its clients for maintenance and services of MEP equipment and system.

Today, Critical Holdings focuses on 3 critical facilities which are plantrooms, cleanrooms and data centres. The group completed 16 projects (12 Plantrooms, 2 Cleanroom & 2 Data centres) with each of the contract value not less than RM3.0mn since 2020. Currently, the group has 63 ongoing MEP engineering Solutions projects and 176 MEP Maintenance and Services contracts valued at RM222.8mn to be recognised over the upcoming 4 years (FY24 to FY27).

The group is supported by 68 local employees, consist of 38 employees from project teams, 18 from maintenance and services and the remaining from development and administration. As of now, the group owns 1 headquarter office in Penang and 1 service and support office in Selangor.

Source: TA Research - 4 Dec 2023