BNASTRA: Construction Firm Secures Major Contract, Bolstering Future Outlook
| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
A prominent construction firm has announced a significant RM743 million contract win for a major residential project in Johor Bahru, substantially boosting its order book and exceeding its full-year replenishment targets. This latest achievement underscores the company’s strong market position and robust pipeline for future growth.
Performance Review
The newly secured contract from MAXIM for the main building works of “The Address, Taman Pelangi” involves the construction of a 72-storey serviced apartment complex. This project, slated to commence in March 2026 and complete within 38 months, has propelled the firm’s year-to-date job wins to a record RM4.1 billion. This figure comfortably surpasses the management’s FY26E replenishment assumption of RM3.5 billion. Consequently, the outstanding order book has reached an all-time high of RM6.5 billion, providing a strong 7x cover for FY25 revenue and significant earnings visibility into the future.
Future Outlook
Analysts express continued optimism regarding the company’s prospects, particularly in Johor. This positive outlook is supported by potential job opportunities linked to CPI’s land in Tampoi, which could add approximately RM500 million to the order book. Additionally, EXSIM’s 6-acre landbank near the New York Hotel in Johor Bahru, with an estimated gross development value (GDV) of RM2.3 billion, presents further growth avenues. While revenue recognition from the latest contract is expected to be skewed towards FY27-28E, the substantial order book provides a solid foundation for future earnings delivery.
Analyst’s Take
Following the contract win, TA SECURITIES has reiterated its “BUY” rating on the firm, maintaining a 12-month target price of RM2.60. This valuation is based on an unchanged target 16x multiple on FY27E earnings per share. The investment bank highlights the company’s strong competitive advantage, its status as a preferred contractor with key clients, and its superior profit margins as key drivers for its positive outlook.
Key Risks
Despite the positive sentiment, the report identifies several potential downside risks. These include slower-than-expected order book replenishment, unforeseen project delays that could impact timelines, and potential cost pressure on project margins, which could affect profitability.
