Crest Group Berhad (CREST, 0323) is set to debut on the Bursa Ace Market on 9 Oct 2024. CREST expertise lies in the provision of equipment and services for imaging, analytical and testing solutions across various industries used primarily for quality inspection, sample analysis and R&D. We expect CREST to register core net earnings of RM15.7m and RM22.3m for FY24F and FY25F respectively. BUY with a fair value of RM0.46, premised on a weighted average 18x PER on FY25F EPS, aligning with comparable listed peers.

With nearly 30 years track record in the imaging, analytical, and testing solutions industry, CREST has established itself as a professional and trusted specialist within the Malaysian market. It differentiates itself by offering end-to-end services, from testing to after-sales support. CREST serves a broad customer base, with a median relationship length of 10 years. The semiconductor industry has been a leading contributor amongst the six key sectors, accounting for 15.3% to 25.9% of the Group's revenue from FY20 to FPE24.

CREST's growth strategy focuses on expanding its regional footprint by (i) building a team in Vietnam, (ii) strengthening its team in Bangkok and (iii) opening new branches in China. This expansion aims to better serve both existing and potential customers, while building a larger services and support team to handle increasing demand.

Additionally, CREST plans to set up a new headquarters in Selangor, with an estimated CAPEX of RM23.6m, to optimize and streamline operations. Furthermore, purchase of latest demonstration equipment including 3 units of X-Ray imaging equipment and 3 units of sample management equipment, highlights a strong commitment to staying ahead of technological advancements and meeting customers’ needs.

Malaysia’s imaging, analysis and testing industry is poised for growth, driven by the progress across various industries, rising adoption of Internet of Things (IoT) and Industry 4.0 technologies. The industry grew from RM4,333m in 2020 to RM7,251m in 2023, achieving a compounded annual growth rate (CAGR) of 18.72%. The key industry coverage, semiconductor and E&E industry, is expected to remain robust and favourable. As such, we expect FY23-FY26F earnings CAGR of 8.5% underpinned by (i) regional expansion, (ii) growth across various industries, and (iii) governmental support. CREST currently is in a net cash position.

Source: Rakuten Research - 7 Oct 2024

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

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