PETALING JAYA: ACE Market-bound Topmix Bhd’s growth is expected to be supported by a better industry outlook as well as better margins, TA Research says.
Topmix is involved in the marketing and sales of in-house brands of surface decorative products.
The surface decorative products are mainly used in commercial and residential interior surface applications, which includes wall panels, counter tops, table tops as well as fixtures and displays.
“We expect the group to record earnings growths of 4.5%, 16.7% and 21% to RM8.4mil, RM9.8mil, and RM11.8mil for the financial year 2023 (FY23), FY24 and FY25 respectively.
“According to an independent market research report prepared by Providence Strategic Partner, which was enclosed in the initial public offering (IPO) prospectus, the surface decorative products market is expected to grow from an estimated RM640.2mil in 2022 to RM760mil in 2026 at a compound annual growth rate of 4.4%.
“The demand will be mainly driven by the recovery and growth in commercial and residential property markets as well as foreign and domestic investment growth,” the research firm said in a report yesterday.
It said there is no listed company from Bursa Malaysia that is directly comparable with Topmix currently.
Using Synergy House Bhd , a furniture player that mainly focuses on the design, development and sale of ready-to-assemble furniture, for peer comparison, TA Research has assigned a target price-earnings multiple of 12 times to Topmix and arrived at a fair value of 36 sen per share.
This is after considering the group’s asset-light business model that focuses on design and development, its ability to offer a wide range of surface decorative products and an experienced management team.
On future plans. the group plans to expand into the assembly of melamine faced chipboard (MFC) products to widen its product offering.
Towards this end, it will construct a new factory for MFC assembly with one assembly line that has maximum production capacity of about 500 pieces per day.
It also intends to set up a new sales office in Penang in order to capture the business opportunities in the northern region of Peninsular Malaysia, plus beef up its mobile application of by appointing a third-party software developer to enhance the functionality and versatility of its mobile application.
In FY21, Topmix’s revenue surged by 40.3% year-on-year (y-o-y) to RM38.6mil from RM27.5mil a year ago, mainly due to stronger sale of high-pressure laminate products following the relaxation of movement control orders. As a result, the group’s core profit jumped 102.5% y-o-y to RM4.4mil.
In FY22, revenue further grew by 70.4% to RM65.8mil, primarily due to intensive marketing activities via product presentations as well as the increase of renovation and refurbishment activities. Together with higher average selling prices of high-pressure laminate products, its core profit surged 82.4% to RM8mil
“Moving forward, we forecast the revenue and core profit to be stronger, supported by a better outlook of surface decorative products market,” said TA Research.
Topmix is slated to be listed on April 23, 2024. Its IPO entails a public issue of 82,709,000 new ordinary shares, and an offer for sale of 19,693,000 shares at an IPO price of 31 sen per share. It aims to raise RM25.6mil from the IPO.