KERJAYA: New Contract Win Boosts Order Book and Earnings Visibility
| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
A leading construction group has successfully secured its inaugural contract for the financial year 2026, significantly enhancing its order book and bolstering future earnings visibility. The new building construction contract, valued at RM201.3 million, was awarded by Greencove Sdn Bhd, a subsidiary of a related property group.
Order Book and Earnings Impact
The newly secured project involves the main building works for a proposed mixed-use development, which includes two 39-storey apartment blocks (780 units), recreational facilities, a five-level podium car park, and commercial space. This latest win expands the total outstanding order book to a robust RM4.4 billion, providing a strong 2.2x cover over the projected FY25 construction revenue. Analysts note this contract contributes approximately 10% towards the group’s FY26 new job assumptions and management’s replenishment targets. With an assumed 10% net margin, the contract is anticipated to generate RM20.1 million in net earnings over its 40-month construction period, commencing April 2026.
Future Outlook and Strategic Pipeline
The outlook for job replenishment in FY26 remains strong, driven by a diversified pipeline of opportunities. Over RM1.0 billion in potential jobs are expected from internal property development arms, complemented by an external tender book exceeding RM3.0 billion. The external pipeline notably includes RM1.5-2.0 billion from residential projects, several industrial property opportunities valued at RM2.0-3.0 billion through its joint venture with Samsung C&T, and two ongoing data centre tenders. The investment bank maintains its earnings forecast, viewing the recent job win as aligning with its existing assumptions.
Analyst’s Recommendation
Analysts from TA SECURITIES have maintained a BUY recommendation, reiterating an unchanged target price of RM3.39. This valuation is based on a target P/E ratio of 17x for CY26 EPS, incorporating a 3% ESG premium reflective of the group’s 4-star ESG rating. The investment bank continues to favor the group due to its solid earnings visibility, consistent and robust order book replenishment capabilities, and the potential for growth in industrial property construction leveraging its partnership with Samsung.
