Future Plans for Growth:
- Expansion of core segment to drive market growth.
The group plans to expand its fibre optic network in Kuching, Miri, Sibu, and Bintulu to meet growing demand and capture business opportunities. RM60.00 million (57.69% of IPO proceeds) will fund the expansion, covering civil works, cable laying, and equipment purchase. The projects are set for completion between 2025 and 2027, with any cost overrun to be funded internally.
- Construction of new telecommunication towers.
The group plans to construct 100 new 4G/5G telecommunication towers in Sarawak, particularly in Miri, Sibu, and Bintulu, to support Malaysia's digital economy and smart city initiatives. RM25.00 million (24.04% of IPO proceeds) will fund the project, which includes civil works, equipment purchase, and approvals. The towers will support the MyDIGITAL and Sarawak Digital Economy Blueprint. The construction is scheduled to begin in 2026, with completion and testing set for 2028.
- Enhancing capabilities.
The group plans to enhance its satellite-based communication networks by acquiring additional mobile and fixed satellite terminals, hardware, software, and enhancing teleport facilities. This will support IoT applications in sectors like logistics, transportation, maritime, and offshore oil and gas. RM4.30 million (4.14% of IPO proceeds) will be allocated to fund these upgrades over 36 months. The group aims to increase service sites, implement early warning systems, and improve data collection on seismic movements and water levels.
M+ Fair Value
We ascribe a fair value of RM0.71 for REACHTEN. Our valuation is derived by pegging a forward P/E of 13.0x to the mid-FY26f EPS of 5.44 sen, implying a 36.5% upside to its IPO price of RM0.52. We believe the pegged P/E is fair given the 12month forward P/E and trailing 12-month P/E among its closest peers stood at 13.3-16.5x.