SSB8: New Contract Win Bolsters Construction Order Book, Analyst Maintains ‘BUY’ Rating
| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.80 (+37.2%) |
| Last Traded | RM0.580 |
| Recommendation |
A construction firm has secured a new RM15.2 million sub-structure work contract, significantly boosting its year-to-date job wins and reinforcing a robust order book. This contract win has led a leading investment bank to maintain its “BUY” recommendation for the company, citing strong earnings visibility.
Project Details and Financial Impact
The latest contract, awarded by Radium Hospital Ayer Keroh Sdn Bhd, involves undertaking sub-structure works for a 7-storey private hospital with 142 beds, including basement facilities and a three-storey parking structure. This project is scheduled to commence on December 15, 2025, with a nine-month duration aiming for completion by September 14, 2026.
This marks the company’s third contract secured in FY26, elevating its total year-to-date job wins to approximately RM137.2 million. Incorporating this new win, the total outstanding order book is estimated to rise to about RM1.47 billion, representing a robust 6.7x coverage of its FY25 revenue. This substantial unbilled order book is expected to ensure solid near-term earnings visibility. Assuming a conservative net margin of 12%, the contract is projected to contribute an estimated RM1.8 million to earnings over its period.
Future Growth Prospects and Analyst Outlook
The investment bank views this initial engagement with Radium as a strategic precursor, anticipating potential awards for the main contractor and M&E contracts for the same hospital project. Leveraging its established track record in mechanical and electrical works through its subsidiary, the group is considered a strong contender for these larger roles. Based on the estimated development cost of RM1.4-1.5 million per bed for the hospital project, additional contracts worth approximately RM196-210 million could be secured, further contributing to order book replenishment and enhanced near-term earnings visibility.
The company maintains a positive outlook on its near-term order book replenishment, supported by strong in-house property project launches with Platinum Victory and Radium, each targeting at least RM1 billion in annual Gross Development Value (GDV), alongside a healthy M&E related tender pipeline of RM384 million. These combined opportunities strengthen confidence in the company’s ability to steadily replenish its order book and meet its FY26 new order book replenishment target of RM1.0 billion. Despite the new contract, the investment bank has made no changes to its earnings forecast at this juncture, as the win falls within its existing job win assumptions.
Investment Recommendation
TA SECURITIES has reiterated its “BUY” recommendation for the company, maintaining an unchanged target price of RM0.80. This target price represents a significant upside of 37.2% from the last traded price of RM0.580. The recommendation is predicated on three key factors: (i) solid earnings visibility backed by a robust unbilled order book and synergistic ties with Platinum Victory and Radium, (ii) strategic exposure to the high-growth data centre space, and (iii) robust double-digit net margins.
