| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
A recent investment bank report highlights a robust financial performance, with the company’s first-half core profit meeting expectations and a significant growth in its outstanding order book. This strong operational momentum underpins a positive future outlook, leading to a reiterated “BUY” recommendation.
Performance Review
For the first half of FY26, the company’s core profit reached MYR53.5 million, marking a substantial 31% year-on-year increase. This figure accounts for 40% of both the investment bank’s and the Street’s full-year projections, indicating performance is well on track. The second quarter of FY26 alone saw a core profit of MYR28.4 million, up 25% year-on-year.
The impressive earnings were largely driven by a higher number of jobs on hand and improved progress billings from ongoing projects. However, the report noted that the core net margin for 2QFY26 stood at 7.2%, a decrease from 9.9% in 2QFY25. This moderation was primarily attributed to the execution of data centre (DC) projects, which typically carry lower net margins ranging between 6-7%.
Future Outlook and Strategic Expansion
The company’s prospects remain strong, bolstered by an expanded order book. As of end-July, its outstanding order book surged to MYR4.4 billion, a significant increase from MYR2 billion in July 2024. Year-to-date FY26, the company has successfully clinched MYR1.6 billion worth of new jobs against an internal target of MYR4 billion. The remaining MYR2.4 billion required to meet this target is expected to largely originate from Johor.
Looking ahead, the company is poised to secure an additional MYR2.1-2.2 billion in new jobs from Johor Bahru by end-FY26, stemming from major developments such as EXSIM Development’s Causewayz Square and MAXIM Global’s Taman Pelangi projects. This robust pipeline supports a projected 3-year (FY25-28) earnings CAGR of 132%.
Furthermore, the company is strategically diversifying its operations beyond traditional non-residential property projects to include data centres and sewage treatment plants. Potential rerating catalysts include securing Engineering, Procurement, Construction, and Commissioning (EPCC) contracts for green infrastructure, particularly in the solar energy sector, through its renewable energy arm.
