BNASTRA: Major Contract Win Bolsters Order Book, Analyst Reaffirms BUY Rating

A prominent construction firm has announced securing its largest-ever contract, valued at RM1.2 billion, for the main building and infrastructure works of the Causewayz Square project in Johor Bahru. This significant win elevates the company’s year-to-date FY26E job wins to RM3.4 billion, successfully achieving 97% of its full-year FY26E replenishment target of RM3.5 billion. The project entails the construction of a 63-storey serviced apartment development, comprising four residential towers with a total of 4,525 units, to be completed in five phases over 34 months from the commencement date.

This latest award further bolsters the company’s outstanding order book to a record RM5.8 billion, representing a robust six times coverage of its FY25 revenue. Analysts are particularly optimistic about the firm’s prospects, noting that Johor-based projects are expected to yield a higher 12% PAT margin, surpassing the group’s high-rise developments in Klang Valley due to more complex logistics and procurement planning. This indicates a strategic advantage in regional project execution.

Future Outlook and Risks

The company maintains a positive outlook on further order book replenishment, with a strong pipeline of potential projects. Key opportunities identified include the MAXIM Global’s Taman Pelangi development, valued at RM800 million, and exploration of opportunities with CPI land in Tampoi, Johor, which could add approximately RM500 million to the order book. These initiatives underscore the firm’s proactive approach to securing future growth.

Despite the strong pipeline and positive sentiment, the company acknowledges potential downside risks. These include slower-than-expected order book replenishment, unforeseen delays in project execution, and potential project margin cost pressures. These factors will require careful management to sustain performance.

Investment Rating

In light of these developments and the firm’s strategic positioning, financial analysts have reiterated a “BUY” rating. They continue to favour the company for its strong competitive advantage, established relationships with key clients, and its ability to achieve superior profit margins. Earnings forecasts remain unchanged, as the recent contract win falls within existing replenishment assumptions, reflecting a consistent performance trajectory aligned with expectations.