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The Star – Publicinvest Sets Fair Value Of 22 Sen For LKL International

KUALA LUMPUR : PublicInvest Research has set a fair value of 22 sen per share for LKL International Bhd’s upcoming initial public offering (IPO) on May 16, citing positive near term catalysts in the medical beds and peripherals industry.

In a note today, the research house said that its fair value implies a 12.3% upside from LKL’s IPO price of 20 sen.

“Our fair value is based on an earnings growth multiple of 12 times for the 2017 financial year (FY17), implying an earnings per share of 1.9 sen. Our growth assumption is supported by the company’s strong local hospital and medical network expansion as well as the benefit from tapping into new export markets,” it said.

According to PublicInvest, LKL has the strength and capabilities to capitalize on the growth in the healthcare industry locally and internationally.

“It has experience servicing established public and private hospitals and medical centres, technical expertise to conform to international compliance standards, and a diversified range of products,” it said.

The company’s target end-users are primarily hospitals and medical centres which made up around 60% of its revenue over the past three years. Its principal market is Malaysia, which constitutes 80.5% of its revenue as at FY15.

For FY15, LKL reported a net profit of RM6.5mil on the back of RM39mil in revenue.

Presently, the company supplies to to hospitals and medical centres in more than 30 countries across six continents, PublicInvest noted.

LKL is expected to raise approximately RM22.6mil from the IPO through the issuance of 113 million shares. The company is primarily involved in the healthcare furniture and equipment business, specifically the provision of medical beds, peripherals and other accessories.

From this, a total of eight million new shares make up the public portion of the IPO.

May 4, 2016

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