BNASTRA: Construction Firm Surpasses Job Win Target, Bolstered by Robust Order Book
| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
A leading construction firm has significantly exceeded its financial year 2026 (FY26) job replenishment target, securing MYR4.2bn in new contracts against an initial goal of MYR4bn. This strong performance is primarily driven by a substantial new MYR743m contract for a 72-storey serviced apartment development in Johor Bahru, known as ‘The Address at Taman Pelangi.’ This project is expected to be completed within 38 months from March 5, 2026.
Performance Highlights
The latest contract win, alongside a previous MYR38m award for sub-structure works, has propelled the company’s total balance orderbook to a record high of MYR6.6bn. This impressive figure translates into an orderbook-to-revenue cover ratio of 7x, indicating strong future revenue visibility. Analysts estimate a net margin of approximately 10% for the main building works of ‘The Address’ project. The company’s strategic diversification beyond non-residential property projects is viewed positively by analysts.
Future Outlook and Opportunities
The outlook remains positive, particularly with substantial opportunities in Johor. Approximately MYR2.5bn worth of contracts have already been secured from the Johor region, and the impending Johor Bahru-Singapore Rapid Transit System (RTS) Link project is anticipated to further stimulate property demand, especially around the Bukit Chagar station. Based on current estimates, jobs from Johor could account for 30% to 35% of the group’s total outstanding orderbook.
Further growth is expected from potential projects like two additional phases for ‘The Asteriaz at Jalan Kebun Teh,’ estimated at MYR400m-MYR500m in construction value, and a MYR1bn potential construction value from EXSIM Development’s 6-acre land near New York Hotel. While FY26F earnings remain unchanged, minor adjustments of about 1% have been made to FY27F-28F earnings to account for the timing of recent award recognitions.
Investment Recommendation
In light of the strong job wins and robust order book, the investment bank maintains a ‘BUY’ recommendation, raising the target price to MYR2.72 (representing a 23% upside from the last traded price of MYR2.22). The stock is currently trading at a 14.2x FY27F P/E, which is considered an unwarranted discount compared to the historical 16x P/E during the CY17 construction upcycle for the Bursa Malaysia Construction Index, especially given the company’s broadened project portfolio. A key downside risk highlighted is sluggish job replenishment trends.
