Swift Energy Technology Berhad (SET, 0337) is set to debut on the Bursa Ace Market on 8 Jan. SET specializes in industrial automation and power systems, serving sectors like oil & gas, edible oils, and food manufacturing. Its services include process control systems, power distribution systems, Ex solar PV systems, and other electrical products. We project SET to register core net earnings of RM16.3m-RM21.8m for FY24- FY26F. BUY with a fair value (FV) of RM0.39 based on a 18x PER over FY26F EPS, a 50% discount to the sector average due to its smaller market capitalisation.

With over 20 years of experience, SET integrates design, procurement, fabrication, assembly, and installation of automation and power systems. Its operations in Singapore, China, and Thailand offer strategic advantages, expanding market reach and customer relations through local expertise and technical support.

SET is the only International Electrotechnical Commission’s System for Certification to Standards Relating to Equipment for Use in Explosive Atmospheres (IECEx) -certified manufacturer of Ex solar PV modules in Malaysia, giving it a unique edge within the energy sector. Its partnerships with Siemens and as an authorized distributor for top brands further strengthen its market position.

SET plans to boost its fabrication capacity and undertake larger projects by constructing a new three-story building. The company also aims to expand in Indonesia via a wholly-owned subsidiary in Jakarta to capitalize on the demand within ASEAN. By enhancing production and establishing an R&D centre, SET seeks to develop new products, particularly in Ex-rated power electronics.

The industrial automation and power sectors are poised for growth, driven by trends in digitalization, Industry 4.0, and the shift to renewable energy (RE), particularly Ex solar PV systems. SET has an outstanding orderbook of RM55.6m as of Nov 2024, translating to 0.6x of FY23 revenue. We anticipate a healthy order book replenishment rate, supported by rising demand as well as the burgeoning investments in the oil & gas sector. With a strong balance sheet of net cash position, SET is well- placed to sustain its financial requirements and drive long-term growth post-listing. Meanwhile, SET does not have any dividend policy at this juncture.

Source: Rakuten Research - 2 Jan 2025

To sign up for an account: http://bit.ly/40BNqKI

[Youtube Tutorial] Account Opening & Enable Foreign Equity: http://bit.ly/3I5Jzxo