Background

Azam Jaya Berhad (AJB) is a leading contractor based in Sabah, specialising in providing construction services. The company focuses on large-scale road infrastructure projects, including constructing roads, highways, flyovers, bridges, and tunnels throughout Sabah.

IPO Statistic

The IPO entails a public issue of 78,800,000 new ordinary shares and an offer for sale of 50,000,000 shares at an IPO price of RM0.78/share.

Public Issue:

• 25,000,000 new shares for application by the Malaysian public;

• 10,000,000 new shares for application by eligible parties; and

• 43,800,000 new shares for private placement to selected investors.

Main Competitive Advantages

1. Established Track Record and Strong Building Capabilities;

2. Specialised in Road Infrastructure Construction; and

3. Capitalising on Robust Federal Infrastructure Capex.

Valuation

At an IPO price of RM0.78/share, AJB is priced at a trailing PER of 15x FY23 core EPS. We ascribe a target PER of 15x CY25 EPS and arrive at a fair value of RM1.54/share, presenting a lucrative upside of 97.4% for our investors. We believe the assigned PE multiple is fair and reasonable, backed by its relatively higher ROE and decent net margin compared to its peers with similar business nature, target clientele and market capitalisation. Not Rated.

Source: TA Research - 23 Oct 2024