EXSIMHB: New Project Wins Strengthen Order Book, Bolstering Earnings Visibility

A recent significant contract win has further strengthened the order book of a key player in the construction sector, reinforcing its earnings visibility and positive outlook. The company, via its wholly-owned subsidiary, recently secured an RM21.9 million interior fit-out sub-contract.

The project, awarded by HAB Construction Sdn Bhd, involves a 50-storey mixed commercial development located in Jalan Sultan Ismail, Kuala Lumpur. This interior fit-out work is slated for completion within 40 months.

Operational Performance and Outlook

This latest contract brings the company’s year-to-date (YTD) new job wins to RM48.8 million, pushing its total outstanding order book to approximately RM200.1 million. This robust order book now provides a healthy 1.4x cover of its estimated FY25 construction segment revenue, ensuring solid near-term earnings visibility. Assuming a consistent PBT (Profit Before Tax) margin of 15% with similar projects, this contract is expected to contribute around RM3.3 million in PBT over its duration.

While the current YTD new job win rate represents approximately 24.4% of the FY26 new order book replenishment assumptions, and the pace has been more gradual than anticipated, the investment bank remains confident that the company is well on track to secure the remainder of its replenishment targets.

The positive stance is underpinned by a strong and sustainable order book replenishment outlook. The company is well-positioned as a preferred interior fit-out contractor within its parent group’s extensive development pipeline. This close alignment in ownership and strategic interests between the company and its parent materially enhances contract award visibility, supporting a steady flow of internal jobs with lower tendering risk and better execution certainty.

Investment Recommendation

Given that the latest contract win falls within the existing FY26 new order book replenishment assumptions, earnings forecasts for the company are maintained at this juncture.

TA Securities maintains its BUY call on the company with an unchanged SOP-derived target price of RM0.30. This recommendation is based on several factors, including its strategic position as a beneficiary of its parent group’s expansive development pipeline, its hybrid hospitality strategy ensuring earnings visibility, and the potential for future value unlock through a hospitality REIT.