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Singapore Investment


 A big wow to  EDELTEQ 0278 EDELTEQ HOLDINGS BERHAD on its debut. Can it go higher?

Edelteq Holdings Bhd joined the list of top performing IPOs on Bursa Malaysia on their debut.

The engineering support provider for integrated circuit (IC) assembly and test processes was on fire as it made a strong debut on the ACE Market on June 7.

The counter opened at 75 sen, skyrocketing 212.5% from its IPO price of 24 sen.

At market close, its share price retreated slightly to 73 sen, marking a closing premium of 204.17%.

Edelteq's closing premium was the third highest among the stocks that have debuted on Bursa this year.

As of June 6, Oppstar Bhd had the highest premium at 285.71%, followed by TT Vision Holdings Bhd (276.47%).

Edelteq closed with a trading volume of 104.52 million, and was the third most active counter on June 7 with a market capitalisation of RM388.73 million.

It is probably Edelteq’s involvement in the semiconductor industry, which makes the company ‘a sexy thing’, although most semicon counters took a beating last year.

The company is also involved in the trading of operating supplies, spare parts and tools for IC assembly and testing.

Its customers are multinational integrated device manufacturers and outsourced semiconductor assembly and test companies in Malaysia and overseas, which include Singapore, Thailand, China and the US.

Nevertheless, investors should be cautious as the semiconductor industry has just entered its downcycle.

This is evident in its declining earnings in the past 6 months.

Its net profit fell to RM5.4 million in FY2022 from RM9 million in the previous year due to lower revenue from the supply and refurbishment segment of IC assembly and test and consumables.

The lower earnings were due to lower revenue from the supply and refurbishment segment of IC assembly and test and consumables.

In terms of revenue, Edelteq saw RM12.4 million in FY2019, then higher to RM16.7 million in FY2020, followed by RM24 million in FY2021 and RM24.4 million in FY2022.

The group noted that the local market brought in RM18.91 million or 77.6% of its total revenue in FY2022. Overseas markets accounted for the remaining 22.4%.

On a brighter note, Edelteq has a fixed dividend policy of paying out up to 20% of its annual net profit.

Hong Leong Investment Bank valued Edelteq at a fair value of 47 sen, based on a target price earnings of 16 times of FY2024 forecast of three sen.

It was in line with smaller cap peers’ average forward price earnings (P/E) but represents a 55% discount to ViTrox Corp Bhd of 36 times.

It remains to be seen if indeed Edelteq can bring more joy to early investors and to be able to sustain it.


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