KUALA LUMPUR (March 10): Oppstar Bhd, en route to list on the ACE Market of Bursa Malaysia on March 15, posted a net profit of RM4.46 million or earnings per share of 0.7 sen for its third financial quarter ended Dec 31, 2022 (3QFY2023).

The integrated circuit (IC) design service provider made a revenue of RM14.61 million during the quarter under review, its Bursa Malaysia filing showed.

There are no comparative figures for the preceding corresponding quarter, as this is the first interim financial statement announced by the company in compliance with Bursa’s listing requirements.

For the cumulative nine months ended Dec 31, 2022 (9MFY2023), Oppstar posted a net profit of RM14.85 million on revenue of RM43.42 million. It said the bulk or 78.63% of the group’s total revenue was contributed from turnkey design service, mainly from turnkey design projects secured from the group’s customers based in China and Malaysia.

Oppstar executive director and chief executive officer Ng Meng Thai said the net profit for 9MFY2023 is equivalent to 89% of the previous year's full-year profit, showcasing the group’s resilience in navigating the market fluctuations.

“Our financials are mainly attributed to the strong demand for IC design service, which has propelled us towards a positive growth trajectory. As we look ahead, we are optimistic about our future prospects and will continue to grow our market share and meet our business growth objectives in the medium term,” said Ng in a separate statement.

The group expects its initial public offering (IPO) to raise RM104.25 million, with an issue price of 63 sen per share. The IPO price translates into a price-earnings multiple of 27.04 times based on the group's earnings of RM14.85 million or 2.33 sen per share for 9MFY2023.

Of the estimated proceeds from the IPO exercise, the bulk or RM50 million would be allocated for business expansion through the expansion of its workforce. Another RM25 million will be for the establishment of new offices and RM12 million for its research and development expenditure.

Another RM12.65 million will be used for working capital and RM4.6 million for listing expenses.

Mercury Securities has a “subscribe” recommendation on Oppstar with a target price of 93 sen — representing a potential upside of 47.6% from its IPO price of 63 sen.

“We like the stock for its attractive growth prospect on the back of its geographical and workforce expansion plans,” said the local research firm in a Feb 27 report.

“The larger workforce will allow the company to be in a stronger position to compete for more orders and contracts and tap into larger potential customers,” it added.  

Mercury Securities added that Oppstar has strong technical capabilities as the group is capable of designing ICs fabricated using advanced process node technology, including the three-nanometer process node.