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KUALA LUMPUR: ACE Market-bound Unique Fire Holdings Bhd is forecast to enjoy stronger revenue and core profit, underpinned by the demand recovery from the construction and property sectors, according to TA Securities Research.
Unique Fire, which is involved in the assembly, distribution and manufacturing of active fire protection systems, equipment and accessories as well as other related services, is due to be listed on on Aug 5, 2022.
In a report, TA Research said it estimated the group to record earnings growths of 22.8%, 25.8% and 19.6% to RM6.2mil, RM7.7mil, and RM9.3mil for financial year ending March 31, 2022 (FY22), FY23 and FY24, respectively.
This will be supported by top-line growth as a result of increasing demand for active fire protection systems and equipment, following the full resumption of construction activities.
“We expect domestic market will remain as the main market for the group,” said the research house.
It based its FY22 to FY24 earnings projections on the group’s anual production capacity for hand portable dry chemical fire extinguisher of 210,000 units for FY22, 445,000 units for FY23, and 445,000 units for FY24.
The earnings projections were also made based on a utilisation rate of 92%, 50%, and 54%, as well as gross margins of 25.1%, 26% and 27.1% for FY22, FY23 and FY24, respectively.,
Regarding valuation, the research unit said that at an initial public offering (IPO) price of 26 sen per share, Unique Fire is priced at a trailing price-to-earnings ratio of 20.7 times FY21 core earnings per share (EPS).
“We value the group at 12 times 2023 EPS, arriving at a fair value of 27 sen per share,” said the research house.
It pointed out that on a pro forma basis, post-listing with utilisation of IPO proceeds, Unique Fire is expected to be in a net cash position of RM6.5mil or 1.6 sen per share.
The group’s main competitive advantages include offering a wide range of fire protection systems, equipment and accessories; strong in-house brands; and an experienced management team.
Key business risks include being exposed to the fluctuation of steel prices; being dependant on the building construction and property development industries; and a resurgence of the Covid-19 pandemic.
The IPO is estimated to raise RM21.8mil and the group’s future plans includes expanding its manufacturing facilities and developing new fire extinguishers, enhancing its operational capabilities and expanding its geographical coverage.
Unique Fire plans to install two new manufacturing lines to make hand portable dry chemical fire extinguisher cylinders that comply with Malaysia and British Standards.