HE GROUP BERHAD

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***Important***Blogger is not wrote any recommendation & suggestion. All is personal
opinion and reader should take their own risk in investment decision.

Open to apply: 12 JAN 2024
Close to apply: 18 JAN 2024
Balloting: 22 JAN 2024
Listing date: 30 JAN 2024

Share Capital
Market cap: RM123.2 mil
Total Shares: 440 mil shares

Industry CARG
Value of Construction Work Completed for Non-Residential Buildings: -2.5%
Value of Construction Work Completed for Electrical Installation: 14.2%
Number of Applications for New Electrical Installations: 4.3%
Number of Applications for Existing Electrical Installations: 3.8%
Competitors comparison (PAT%)
1. HE Group: 5.7% (PE12.9)
2. LWE Engineering S/B: 10.6%
3. Hong Hin Electrical S/B: 
4. CBH Engineering S/B: 8.8%
5. PESTECH S/B: 4.1%
6. Kinergy Advancement Bhd: 1.5% (PE30.18)
7. Others: -0.4% to 7.2%

Business (FPE 2023)
Provision of power distribution system, other building systems and works, hook-up and retrofitting of electrical equipment and trading.
Revenue Segment
1. Power distribution: 66.54%
2. Other building system and works: 28.49%
3. Electrical equipment hook-up and retrofitting: 4.81%
4. Trading of electrical product: 0.16%

Fundamental
1.Market: Ace Market
2.Price: RM0.28
3.Forecast P/E: 12.90 (estimated latest 12 month, EPS RM0.0217)
4.ROE(Proforma III): 16.61%
5.ROE: 38.8%(FPE2022), 32.5%(FYE2021), 18.69%(FYE2020).
6.Net asset: RM0.10
7.Total debt to current asset: 0.732 (Debt: 87.464 mil, Non-Current Asset: 6.867mil, Current asset: 119.471mil)
8.Dividend policy: didn't have formal dividend policy.
9. Shariah status: Yes

Past Financial Performance (Revenue, Earning Per shares, PAT%)
2023 (FPE 31Aug, 8mth): RM138.577 mil (Eps: 0.0165), PAT: 5.24%
2022 (FYE 31Dec): RM107.573 mil (Eps: 0.0140), PAT: 5.73%
2021 (FYE 31Dec): RM100.461 mil (Eps: 0.0094), PAT: 4.12%
2020 (FYE 31Dec): RM31.388 mil (Eps: 0.0039), PAT: 5.41%

Order Book 
FYE2023: 22.993mil 
FYE2024: 188.916mil
Trade receivable vs revenue
2020: 33.3%
2021: 37.73%
2022: 39.6%
2023: 45.76%

Major customer (2023)
1. Customer A: 42.11%
2. Zalam Corporation Sdn Bhd: 31.95%
3. Customer C: 9.25%
4. Exyte Malaysia Sdn Bhd: 6.45%
5. Xeonics Co., Ltd: 4.59%
***total 94.35%

Major Sharesholders
1. Haw Chee Seng: 20.42% (direct)
2. Eng Choon Leong: 14.8% (direct)
3. Hexatech Energy Consolidated Sdn Bhd: 24.6% (direct)
4. Yong Chong Cheang: 24.6% (indirect)

Directors & Key Management Remuneration for FYE2023
(from Revenue & other income 2022)
Total director remuneration: RM0.884 mil
key management remuneration: RM0.85mil – RM1.1mil
total (max): RM1.984 mil or 13.22 %

Use of funds
1. Business expansion: 15%
2. Capital expenditure: 7.19%
3. Working capital: 62.19%
4.Estimated listing expenses: 15.62%

Conclusions (Blogger is not wrote any recommendation & suggestion. All is personal opinion and reader should take their own risk in investment decision)

Overall is reasonable price and but risk level is a bit high. 

*Valuation is only personal opinion & view. Perception & forecast will change if any new quarter result release. Reader take their own risk & should do own homework to follow up every quarter result to adjust forecast of fundamental value of the company.