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MSB Global Group Berhad: A Promising Opportunity at RM0.20 IPO Price
MSB Global Group Berhad ("MSB Global"), a Malaysia-based investment holding company, is preparing to list at an initial public offering (IPO) price of RM0.20 per share, presenting investors with an appealing entry into a business entrenched in the automotive aftermarket sector. Through its subsidiaries, MSB Machinery Corporation (Malaysia) Sdn Bhd and SP Industry (M) Sdn Bhd, the company engages in the marketing, trading, and distribution of automotive spare parts, lubricants, fluids, and related products, including outdoor telecommunication cabinets and electrical items. Bolstered by strong revenue growth in its lubricants segment, a strategic push into in-house manufacturing, and an early foray into the electric vehicle (EV) market, we assign a target price of RM0.30, suggesting a 50% upside from the IPO price. This valuation balances the company’s growth prospects with the inherent risks of its ambitious expansion plans.
The operational backbone of MSB Global lies in its two subsidiaries. MSB Machinery Corporation, established on November 22, 2000, manages a diverse portfolio encompassing car spare parts, lubricants, fluids, and telecommunication-related products, while GSP Industry, incorporated on April 24, 2002, focuses solely on automotive spare parts distribution. The lubricants and fluids business has proven particularly resilient, with revenue rising from RM9.63 million in FYE 2021 to RM15.97 million in FYE 2022—a substantial 65.84% increase—before reaching RM19.73 million in FYE 2023, up 23.54%. This steady growth reflects MSB Global’s ability to tap into Malaysia’s aftermarket demand, underpinning its investment case at the RM0.20 IPO price.
Beyond its trading operations, MSB Global is charting a path toward in-house production of automotive lubricants and fluids. This shift will be facilitated by a new factory and warehouse on a 1.01-hectare site with a 79,905-square-foot built-up area, designed to improve control over product quality, supply reliability, and cost structures. By building on the success of its lubricants segment, the company aims to enhance profitability and differentiate itself in a competitive market. However, the capital-intensive nature of this transition introduces execution risks, such as potential delays or cost overruns, which investors must consider against the stock’s attractive entry point.
MSB Global is also positioning itself for the future with a diversification into the EV market, planning to introduce an in-house branded EV charger. This move aligns with Malaysia’s gradual embrace of EVs, driven by government incentives and rising consumer interest. Though the initiative is modest in scope—supported by just RM0.84 million from IPO proceeds—it offers a foothold in the sustainable mobility space, potentially enhancing long-term growth prospects. At RM0.20, this strategic step adds a layer of upside potential, albeit with limited near-term earnings impact.
The IPO, set to raise RM26.60 million, outlines a pragmatic use of proceeds to fuel MSB Global’s next chapter. Around RM4.97 million (18.70%) will finance the factory-cum-warehouse reconstruction, while RM6.00 million (22.58%) is earmarked for machinery and equipment, highlighting the company’s focus on production capacity. The EV charger project receives RM0.84 million (3.16%), reflecting a conservative initial investment. On the financial side, RM5.50 million (20.67%) will repay bank loans, easing debt pressures and strengthening the balance sheet, while RM4.79 million (17.99%) supports working capital needs, and RM4.50 million (16.90%) covers listing expenses. This allocation strikes a balance between growth and stability, reinforcing the stock’s appeal at RM0.20.
From an investment perspective, MSB Global’s RM0.20 IPO price offers a compelling valuation relative to its growth narrative, supporting our RM0.30 target price. The lubricants segment’s consistent performance provides a stable revenue base, while the manufacturing transition could drive margin improvements if managed effectively. The EV charger venture, though nascent, positions the company to benefit from emerging trends over time. Key risks include construction setbacks, competitive dynamics in the aftermarket sector, and the gradual scaling of EV-related revenue. At RM0.20, the stock presents a 50% upside potential to RM0.30, assuming smooth execution of its strategic initiatives, making it a solid option for investors seeking exposure to Malaysia’s automotive growth story.
In conclusion, MSB Global Group Berhad enters the market at RM0.20 with a mix of proven operations and forward-looking strategies. Its lubricants success, manufacturing ambitions, and EV diversification create a balanced investment case, while the IPO proceeds provide a clear execution framework. At this price, the stock offers an attractive entry with a RM0.30 target, positioning MSB Global as a noteworthy contender in Malaysia’s evolving automotive landscape.
Q4 results have been released. Net profit declined primarily due to a one-time listing expense of RM2.95 million and provisions for employee bonuses. Overall not bad
