TALIWRK: Infrastructure Firm Posts Earnings In Line with Expectations, Driven by Operational Efficiencies

An infrastructure group has announced its 9M25 core profit of MYR41.9 million, reflecting a 26% year-on-year decline. Despite this, analysts have deemed the results to be in line with expectations, primarily due to anticipated toll compensation and higher construction progress for the Sungai Rasau project in late FY25. The firm continues to be favored for its domestic-centric focus, undemanding valuation, and attractive dividend yield.

Performance Review

A closer look at segmental performance reveals a mixed yet strategically positive outcome. The renewable energy segment recorded a significant turnaround, posting an EBIT of MYR2.9 million in 3Q25, a stark contrast to the MYR10.5 million loss before interest and tax in 3Q24. This improvement was largely driven by a 0.5% year-on-year increase in energy output and, notably, the absence of prior year’s write-offs for old solar panels and associated contractor costs. Furthermore, the construction arm saw its EBIT rise to MYR1.6 million in 3Q25 from MYR0.8 million in 3Q24, propelled by enhanced progress on Sungai Rasau Stage 1 Package 2 and 3, which achieved 31% and 15% completion rates respectively by the end of 3Q25. This marks the segment’s highest quarterly EBIT in eight quarters.

Challenges Faced

Despite these gains, certain segments faced headwinds. The water treatment and supply division experienced a 10% year-on-year decline in EBIT for 3Q25, even with a marginal 0.2% increase in metered sales. This was mainly attributed to higher rehabilitation and maintenance expenses. Similarly, the Grand Saga Highway toll division reported a slight 0.7% year-on-year drop in average daily traffic during 3Q25. The opening of the East Klang Valley Expressway (EKVE) on August 30, 2025, which included a two-month toll-free period, significantly impacted the highway segment, contributing to an 83% slump in its EBIT for the quarter.

Future Outlook and Rerating Catalysts

Looking ahead, the company’s prospects remain positive. It boasts an order book of over MYR1 billion worth of tenders related to crucial water infrastructure projects. New job wins for its construction arm, particularly considering the last significant project was secured in December 2021, could serve as a powerful rerating factor for the stock. Another potential catalyst for rerating includes quicker-than-expected approval for a tariff hike for its waste management associate. However, analysts caution that lower-than-expected water consumption remains a key risk.

Rating and Target Price

RHB Investment Bank maintains its BUY recommendation for the company. The target price for the stock is set at MYR1.01, representing a substantial upside potential of 94% from the current market price, based on the firm’s robust domestic focus and attractive dividend yield.