KUALA LUMPUR (July 7): Hong Leong Investment Bank (HLIB) Research has ascribed a fair value (FV) of RM1 for Seng Fong Holdings Bhd (SFH) and said SFH is currently optimising its capacity by 16.9%, driven by increasing demand from China, the world’s largest vehicle market.

In a note on Thursday (July 7), the research house said that furthermore, the commencement of new solar and biomass systems over FY22-23 will improve SFH’s cost structure.

“We take comfort of SFH’s cost-plus business model, protecting its gross margin from the increasing raw material and distributional costs.

“We derive a FV of RM1 for SFH, based on 11x PER FY23, given its healthy balance sheet, stable business model, earnings growth and attractive dividend yield,” it said.

HLIB does not have a rating on SFH, which is slated to be listed on Bursa Malaysia on Thursday with an initial public offering price of 75 sen.