KUALA LUMPUR: Kucingko Bhd, which is slated to go public on the ACE Market, may see strong double-digit earnings growth in the medium term.
According to TA Research, it expects the group to record an earnings growth of 28.3%, 19.3% and 19.6% in the financial year 2024 (FY24), FY25 and FY26, respectively.
The growth is supported by its unbilled order book of RM23.3mil as of May 28 and the better outlook for the 2D animation production sector, it said.
Foreign markets are expected to remain the company’s primary revenue generator.
“Their diverse foreign market coverage, serving clients in North America, Asia-Pacific and Europe, allows them to tap into multiple revenue streams and reduces dependence on any single market,” TA Research said.
In FY22, its revenue jumped 32.9% year-on-year to RM23.5mil from RM17.7mil a year ago.
This was mainly driven by the increase in revenue from North American countries, where the company had realised eight animation or cartoon projects.
Its principal country markets are in the United States, Canada, France and Australia.
According to Fortune Business Insights, the global video streaming market size was valued at US$555.9bil in 2023.
The market is projected to grow from US$674.3bil in 2024 to US$2.66 trillion by 2032 with a compounded annual growth rate of 18.7% during the forecast period.
The key drivers of this growth would be the increased popularity of social media platforms and rising Internet connectivity which would aid growth in the various distribution platforms such as Netflix, Disney+, Hulu or Amazon Prime, it said.
It noted that online streaming and downloads have become crucial in driving demand for content, including 2D animated content.
In a non-rated report, TA Research valued the company at 18.4 times FY25 forecast earnings per share, which translates to a fair value of 43 sen per share.
Kucingko aims to raise RM30mil through its initial public offering to fund its capacity expansion.
Some RM17.8mil of the proceeds will go towards setting up a production branch office in Sabah and Sarawak, while another RM4.4mil will be used to set up a sales office in the United States.
Of the remainder, RM4.3mil will go towards working capital while RM3.6mil will defray the listing expenses.
In a previous report, executive director Ooi Kok Hong said the funds raised from the IPO will enable the group to expand its production capabilities locally and improve its operational efficiency, positioning it strongly to meet the increasing demand for high-quality animation content in Malaysia and beyond.