SAG Sets Sights on Growth with RM0.88 Fair Value Backing Johor Expansion, Steel Upstream Play and RM388.6 Million Unbilled

Signature Alliance Group Berhad (KLSE: 0360), a rising player in Malaysia’s interior fit-out and construction space, is poised for steady growth following its upcoming IPO on Bursa Malaysia. Malacca Securities estimates a fair value of RM0.88 per share, implying a 41.9% upside from its IPO price of RM0.62, supported by a 3-year earnings CAGR of 9.7% driven by geographic expansion, upstream integration and a robust tender pipeline.

Established in 2009, SAG has evolved into a project-based service provider focused on interior fit-out and light construction projects across commercial, residential, and industrial segments. As at the latest practicable date, the Group has completed 624 projects, with 24 ongoing, underpinned by unbilled contracts totalling RM388.6 million. The majority of revenue is derived from commercial properties (75.2%), with remaining contributions from industrial (18.4%) and residential (6.4%) developments.

Resilient Growth Backed by Strong Financials

SAG’s revenue soared 122.6% year-on-year to RM386.0 million in FY2024, from RM173.4 million previously, reflecting the Group’s ability to scale execution capacity amid robust project awards. The Group’s core segment: interior fit-out services, continues to dominate revenue, driven by project wins in high-specification commercial and industrial spaces.

Net margins improved to 10.5% in FY2024, up from 6.0% in FY2023, reflecting better project mix and cost optimisation. Net cash from operations rose to RM27.6 million, while the balance sheet expanded to RM274.4 million in total assets, with equity rising to RM66.1 million. Gearing remains elevated pre-IPO, though expected to normalise post-listing.

Malacca Securities forecasts core PATMI to grow to RM47.3 million, RM50.4 million, and RM53.5 million over FY2025 to FY2027. This growth will be supported by:

Ongoing replenishment from a RM1.1 billion tender book,

Timely expansion into Johor and Penang in tandem with major property rollouts and economic zone development, and

Upstream integration into steel fabrication, which enhances control over cost, timelines, and design flexibility.

Strategic Expansion and Differentiation

SAG’s future growth will be anchored by its expansion into Johor, amid rising FDI, government tax incentives, and the establishment of the Johor-Singapore Special Economic Zone (JSSEZ). These macro tailwinds are expected to stimulate demand for premium interior solutions across corporate offices, business parks, and industrial hubs.

At the same time, SAG is leveraging its CIDB Grade G7 certification to tender for higher-value contracts. As of FY2024, SAG has secured 453 interior fit-out projects valued at RM436.4 million, with average tender submissions of nine per week. The Group also plans to roll out in-house steel and stone fabrication, which should not only enhance margins but also support customisation and project control.

Market Position and Valuation

With a reported market share of 8.1% in Malaysia’s interior fit-out industry, SAG is well-positioned to ride on broader sectoral momentum. According to DOSM, the overall value of construction work grew 20.2% in 2024, while the interior fit-out segment surged 62.3% year-on-year to RM1.99 billion, a figure expected to grow to RM2.9 billion by 2027, driven by evolving demands for functional and aesthetic workspaces.

Malacca Securities’ valuation of RM0.88 per share is based on an 18.0x P/E multiple on FY26F mid-cycle EPS of 4.88 sen. This is aligned with sector peers within the Bloomberg GICS Construction & Engineering index, which trade between 17.9x and 23.1x forward earnings.

Risks and Mitigation

Key risks to SAG include its dependence on project-based revenue with no recurring streams, reliance on key executives and subcontractors for execution, and potential working capital strain from upfront procurement costs. Nonetheless, these are partially mitigated by a diversified client base, progressive billing mechanisms, and ongoing investments into upstream integration.

ESG Commitment

SAG has articulated a forward-thinking ESG agenda:

Environmental: Adopts FSC-certified wood, low-VOC materials, and is piloting a waste segregation system.

Social: Offers skill conversion programmes for semi-skilled workers and enforces strict site safety measures aligned with CIDB standards.

Governance: Enforces anti-bribery policies with board-level oversight and conducts periodic ESG materiality assessments.

Conclusion

With strong financial fundamentals, a high-quality orderbook, strategic expansion plans, and alignment with secular growth in Malaysia’s property development and ESG-compliant construction space, SAG presents an attractive value proposition. At a fair value of RM0.88, the Group offers a compelling case for investors seeking exposure to the midstream construction value chain with scalable upside.