KUALA LUMPUR: JF Apex Research has ascribed a fair value of 31 sen for BCM Alliance – which supplies equipment for the commercial laundry and medical devices -- which is 63% above its offer price of 19 sen.

It said on Thursday its valuation was pegged at 13 times FY17 EPS forecast of 2.4 sen. 

“Our target price-to-earnings ratio (PER) is lower than the trading and services industry’s average PER of 18 times in view of its smaller market cap,” it said.

JF Apex Research said BCM Alliance can deliver earnings growth of 14% for FY16F and 46% for FY17F. Bassed on the fair value, this is 63% above from the listing price of 19 sen.

BCM Alliance provides equipment in the commercial laundry equipment and medical devices industry in Malaysia. 

It also distributes for well-established and well-known brands of commercial laundry equipment and medical devices.

It sources a number of reputable international brands and manufacturers such as Alliance Laundry, Hitachi Medical Systems (S) Ptd Ltd, and STERIS Corporation. 

“We opine that BCM’s role as a distributor is not easily replaceable as the equipment manufacturers and end-users for both business segments are still heavily reliant on the group for its extensive technical support, timely delivery of products as well as comprehensive training services for operating and maintenance of the equipment. 

“We reckon that the group enjoys healthy business model as its commercial laundry business segment renders exciting growth opportunity with mushrooming of self-service launderettes locally,” it said.

BCM Alliance also supplies medical imaging equipment, disinfection, sterilisation and surgical room products to about 28 branches of hospitals under KPJ Healthcare Group and 10 medical centres of Columbia Asia Group. 

The research house said the company's medical devices business segment offers stable earnings underpinned by defensive healthcare sector.

Based on the study done by the consultant Protégé Associates, the medical devices industry in Malaysia was valued at RM10.2b in 2015, and is expected to reach RM17.4b in 2020 with forecast CAGR of 11.2% from 2016 till 2020. 

It said the sustainable demand for medical devices will be underpinned by the growing and ageing population, prevalence of chronic lifestyle disease with rising patients seeking for treatment and diagnosis, increasing healthcare expenditure, as well as increasing number of hospitals and medical centres which require a wide range of advanced medical devices and equipment.

“We are upbeat on the Group’s future plans to introduce sanitising and hygienising cabinet (an alternative to remove odours and bacteria from garments),” it added.

BCM Alliance also targets to expand its product range to include wet cleaning machines (as an alternative to traditional dry cleaning processes) as it is the most environmentally sensitive professional method of garment cleaning and generates better results for removing stains, especially on certain fabrics. 

As for its medical devices business segment, the group aims to extend its product range to pre-treatment, testing and health management tools such as blood pressure, blood glucose, body fat, body composition monitors, respiratory care products by supplying to local pharmacies.

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