Big Caring could command a higher post-listing valuation, says BIMB Securities
Strong institutional investor demand and Big Caring Group Bhd’s position in the fragmented pharmacy market support the prospect of a premium post-listing valuation. However, the stock’s long-term appeal still depends on the company’s ability to expand its business beyond pharmacy retail.
Highlights
- Big Caring launched its IPO at RM1.08 per share, with a valuation of 42 times earnings and 41% of the institutional offering backed by 19 anchor investors.
- BIMB Securities expects Big Caring’s net profit to reach RM404 million in the financial year ending June 2029, with average annual growth of 19%.
- To sustain growth after 2029, Big Caring will need to increase sales per outlet, pursue acquisitions or shift towards a broader healthcare platform.
This article was translated from the original. Read the original version by our correspondent here.
Valuation outlook and IPO support
According to The Edge Malaysia, BIMB Securities said in its initial coverage note that Big Caring merited a buy recommendation, with post-listing demand expected to continue supporting an expansion in the stock’s valuation.The research firm said participation by anchor investors, who took a substantial portion of the shares on offer, helped strengthen the confidence of other investors. Big Caring, which operates the BIG Pharmacy and CARiNG Pharmacy chains, set its initial public offering price at RM1.08 per share, valuing the company at 42 times its trailing earnings. The IPO was backed by 19 anchor investors, who subscribed for 41% of the institutional offering.
According to BIMB Securities, anchor investors typically include large institutions such as pension funds and insurance companies that commit to taking up a portion of an IPO’s shares before they are offered to retail and other institutional investors. Their presence generally helps build confidence in the offering.
Growth beyond retail is needed
BIMB Securities’ projections show that Big Caring could post a net profit of RM404 million by the financial year ending June 2029, with average annual growth of 19%, marking the peak of the company’s organic growth.After that period, the company will need to increase sales per outlet or pursue acquisitions to maintain momentum. A detailed market study estimates that Big Caring could still open 166 high- and medium-confidence locations, but BIMB Securities described this as adequate room for expansion rather than a particularly high ceiling. As of the end of September, the company had 668 outlets.
The research firm added that further growth will require Big Caring to demonstrate its ability to make a strategic shift towards a broader healthcare platform, rather than relying solely on its pharmacy retail model.
Previously, we examined Big Caring Group’s retail underwriting agreement ahead of its listing on Bursa Malaysia’s Main Market.
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