| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM3.39 (+24.7%) |
| Last Traded | RM2.72 |
| Recommendation |
A prominent construction firm has secured a significant RM225.0 million contract for a main building project, bolstering its already robust order book and reinforcing a positive earnings outlook. The new award is for the construction of a 50-storey serviced apartment tower, including M&E floors, commercial spaces, multi-level car parks, and recreational facilities, forming Phase 2 of the Gen Rise project. This latest win follows an earlier RM162.0 million award for Phase 1 of the same development. The construction period is estimated at 38 months, commencing on January 16, 2026, and is projected to contribute RM22.5 million in net earnings based on a conservative 10% net margin.
Performance Review and Order Book Strength
With this new contract, year-to-date job wins for FY25 have climbed to approximately RM1.8 billion. This brings the total outstanding order book to a substantial RM4.3 billion, which provides a healthy 2.5 times cover over its FY24 construction revenue, ensuring solid near-term earnings visibility. The group has successfully met both analyst forecasts and management’s targeted new job replenishment levels for FY25. This marks the second Johor job win for the firm in FY25, highlighting its expanding footprint in the Southern property market, an area experiencing sustained demand for high-density residential projects and robust tender activity.
Future Outlook and Strategic Position
The company’s tender pipeline remains strong, with over RM1.0 billion from internal projects (E&O and Kerjaya Prospek Property) and an external tender book exceeding RM3.0 billion. The external pipeline includes RM1.5-2.0 billion in residential projects, two ongoing data centre tenders, and several industrial property opportunities through a joint venture with Samsung C&T valued at RM2.0-3.0 billion. These healthy pipelines are expected to sustain order book replenishment visibility into FY26-27. Further earnings visibility is supported by upcoming internal property development launches with a combined Gross Development Value (GDV) exceeding RM1.6 billion. The firm is strategically positioned to capitalise on the ongoing Southern property upcycle and growth in industrial property construction, particularly through its partnership with Samsung.
Analyst Recommendation
TA SECURITIES has reiterated its “Buy” recommendation for the stock, with a target price of RM3.39, representing a 24.7% upside from its last traded price of RM2.72. The valuation is premised on 17x its CY26 EPS, with the investment bank favoring the company due to its solid earnings visibility, consistent order book replenishment, and potential growth in industrial property construction leveraging its Samsung partnership. The firm also holds an ESG rating of ★★★★.
