Elridge Energy Holdings (ELRIDGE), a key player in the biomass fuel sector, is set to debut on the ACE Market of Bursa Malaysia Securities Berhad on 22 August 2024. The company, which specialises in the manufacturing and trading of biomass fuel products, is offering its shares at an initial public offering (IPO) price of RM0.29, reflecting a historical FY23 price-to-earnings ratio (PER) of 24.6x. When annualised, this equates to a 12.9x PER based on the projected 4MFY24 earnings per share (EPS) of 2.2 sen.

ELRIDGE is engaged in producing and trading palm kernel shells and wood pallets, with a customer base primarily comprising biomass fuel trading companies that supply the power generation and manufacturing sectors. The company's largest market is Singapore, which contributed 47.6% to its revenue in the first four months of FY24, followed by Indonesia at 31.5%, Japan at 14%, and Malaysia at 6.8%.

The company's prospects are bolstered by rising global demand for renewable energy and supportive government policies. According to an Independent Market Research Report, the palm kernel shell industry in the Asia Pacific region is projected to grow at a compound annual growth rate (CAGR) of 8.9% from 2024 to 2026. To capitalise on this growth, ELRIDGE plans to increase its production capacity by 75% through the establishment of three new factories in Pasir Gudang, Johor; Kuantan, Pahang; and Lahad Datu, Sabah by July 2025. As of April 2024, the company's Port Klang Factory's palm kernel shell production lines operated at an 83.4% utilisation rate.

On its listing day, ELRIDGE will be trading at a 12.9x annualised 4MFY24 EPS of 2.2 sen, compared to the Bursa Malaysia Industrial Production Index's 2024 estimated PER of 16.3x. The IPO marks a significant step for Elridge Energy as it seeks to expand its footprint in the growing renewable energy market.

Source: Maybank
Title: Biomass player going for listing