West River Berhad: Riding on M&E Engineering Momentum with Undervalued Entry Point
West River Berhad (“WESTRVR”) is poised to make its debut on the ACE Market of Bursa Malaysia on 5 May 2025, bringing to the market its integrated capabilities in mechanical and electrical (M&E) engineering services, air-conditioning and mechanical ventilation (ACMV), intelligent building solutions, and the manufacturing of electrical panels and distribution boards. With over 19 years of industry experience and a G7 contractor license under its belt, the company stands out for its vertically integrated business model and digital-led project execution capabilities.
The IPO exercise comprises a public issue of 71.54 million new shares and an offer for sale of 35.77 million shares at RM0.39 each, representing 30% of its enlarged issued share capital. This values the group at a market capitalisation of RM139.5 million.
One of the most compelling investment angles for WESTRVR is its robust order book and growth trajectory. As of March 2025, the company boasts an unbilled order book of RM247.3 million from 26 ongoing projects. Additionally, its earnings forecast for FY25F indicates a projected core net profit of RM14.5 million, a 23.4% increase from the previous year. This momentum is expected to be driven by ongoing project execution, new job wins amounting to RM100 million in FY25, and an anticipated 15% annual growth in its manufacturing division.
Despite its relatively smaller market capitalisation compared to peers such as KJTS Group, Kinergy Advancement, and Critical Holdings, WESTRVR’s financial performance is not to be understated. Its return on equity (ROE) for FY24 stood at a commendable 41.7%, reflecting management’s efficient capital deployment and healthy profitability. In comparison, several larger peers post lower ROEs, despite trading at higher price-to-earnings multiples.
On a trailing basis, WESTRVR is priced at 12x FY24 core earnings at IPO, which is undemanding given the company’s scale-up potential and forward earnings trajectory. TA Securities has assigned a fair value of RM0.45 per share based on a forward PE of 11x CY25 earnings per share (EPS) of 4.1 sen. This represents a 15.4% upside from the IPO price, positioning the counter as attractively valued in the context of current market sentiment where quality earnings visibility is prioritised.
Post-listing, the company’s balance sheet is projected to strengthen from a net debt position of RM3.3 million to a net cash surplus of RM20.9 million. This financial flexibility, enabled by IPO proceeds of RM27.9 million, will be channelled into strategic priorities—namely, the acquisition of industrial land and the construction of a new 35,000 sq ft manufacturing facility to expand production capacity by 300% over the next three years. The expansion addresses critical space constraints at its current site, which is already operating at over 95% utilisation.
Beyond infrastructure, WESTRVR also plans to reinforce its business development function by hiring key personnel to enhance market outreach and project acquisition. This internal strengthening is timely, given the tailwinds in M&E demand stemming from Malaysia’s economic rebound and increased infrastructure activity supported by public-private partnerships and national development frameworks such as the National Energy Transition Roadmap.
Macro-wise, industry dynamics are supportive. The property sector has rebounded strongly, with transaction values rising from RM113.2 billion in 2018 to RM192.9 billion in 2024. Coupled with growth in the semiconductor, foodservice, data centre, and telecommunications segments, the M&E engineering landscape is expected to enjoy sustained demand, benefiting players like WESTRVR with a proven execution track record and technological edge.
Despite not having a formal dividend policy, WESTRVR has declared a dividend of 1.1 sen in FY24, translating to a yield of 2.9% at IPO price. While modest, the payout reflects its cash-generative nature and reinforces investor confidence in the company’s stability.
In summary, West River Berhad presents an opportunity for investors seeking exposure to the infrastructure-driven recovery and digitalisation trend within Malaysia’s construction and engineering sector. Backed by solid fundamentals, a healthy pipeline, and an expansion-focused roadmap, the stock offers a compelling case for capital appreciation. With a target price of RM0.45 per share, the counter appears undervalued relative to its earnings growth potential and peer benchmarks.