IBRACO: Steady Earnings Growth Driven by Construction and Property Segments, Strong Outlook Maintained
| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
A recent investment bank research report indicates that the company’s core net profit for the first nine months of 2025 (9M25) reached RM38.3 million, aligning broadly with the investment bank’s expectations and representing approximately 70% of its full-year forecast.
Performance Overview
In the third quarter of 2025 (3Q25), core net profit registered a 15.1% quarter-on-quarter increase to RM13.2 million, largely driven by an improved performance in the property development segment. Year-on-year, core net profit surged by 43% to RM38.3 million, primarily buoyed by stronger contributions from the construction sector.
Operational Drivers
The robust year-on-year performance was underpinned by accelerated progress in several government infrastructure projects across Sarawak. The construction division is poised to continue benefiting from ongoing government infrastructure rollouts. Further enhancing operational efficiency and margins, the report highlights the company’s vertical integration strategy, encompassing quarry, concrete, asphalt, and pipe manufacturing operations. The planned commencement of a new quarry at Gunung Sinmajau in the second half of 2025 (2H25) is expected to further bolster self-sufficiency in building materials.
Future Prospects and Visibility
A stronger final quarter of 2025 (4Q25) is anticipated, driven by faster work progress on current projects and the expected maiden contribution from the new Demak Laut light industrial development, catering to SME and logistics demands. The company boasts significant near-term earnings visibility, supported by unbilled sales of RM360 million and a substantial construction order book of RM794 million. Upcoming and ongoing property projects such as The NorthBank, Arden City, Residensi NewUrban, and the Regency Specialist Hospital Kuching (targeted for 2029) are expected to be key anchors for future property earnings and enhance long-term asset value.
Investment Rating Adjustment
Despite a positive long-term view on the company’s strong market position in Sarawak, which underpins healthy property sales and solid construction margins, the investment bank has adjusted its recommendation. The 10% appreciation in the stock’s share price over the past three months is seen as having capped its near-term upside. Consequently, the rating has been downgraded to Hold from Buy, with the investment bank advising potential investors to await a more attractive entry level. The target price remains at RM1.41 per share, indicating a 7.6% potential upside from the last traded price of RM1.31.
