PWRWELL: Strong Project Wins Drive Upward Earnings Revisions, Target Price Boosted
| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.93 (+38.8%) |
| Last Traded | RM0.67 |
| Recommendation |
A recent investment bank research report indicates that previous earnings estimates for the company were overly conservative, leading to significant upward revisions for the coming fiscal years. This positive outlook is largely driven by a substantial purchase order valued at RM68.4 million, secured by the company’s wholly-owned subsidiary, Powerwell International Sdn Bhd. The order, from a leading multinational technology corporation, involves the design, procurement, delivery, testing, and commissioning of low-voltage switchgears for a data centre project in Selangor. The project is slated for completion by the second quarter of calendar year 2026.
Financial Highlights
Management has affirmed that this new purchase order is expected to contribute positively to consolidated earnings and net assets for fiscal years 2026 and 2027, with no identified exceptional operational risks. Approximately RM20.5 million (c.30%) of the order value is anticipated to materialize by the fourth quarter of fiscal year 2026, primarily through design and procurement works. The remaining RM47.9 million (c.70%) is projected to be fully recognized in fiscal year 2027, aligning with the company’s typical back-loaded revenue recognition pattern. This translates into an additional earnings uplift of approximately RM2.6 million in FY26F, assuming net margins of around 12.7%, which is consistent with industry channel checks.
Future Outlook and Recommendation
The positive developments necessitate further earnings revisions for fiscal year 2027. The company’s management has indicated that no immediate funding is required. Further developments are expected as the value chain transitions from construction to downstream segments. Separately, the company is actively monitoring opportunities within Bangladesh’s Renewable Energy (RE) sector, pursuing additional deals in the region.
Consequently, earnings forecasts for FY26-27F have been revised upwards from RM20.7 million/RM32.2 million to RM23.0 million/RM40.5 million, representing year-on-year growth of 22.7% and 75.7%, respectively. Based on a PER of 17x applied to mid-FY27F earnings, the investment bank has revised the company’s Target Price (TP) upward by 21.0%, from RM0.77 to RM0.93. This adjustment fully incorporates the value expected from these recent project successes. The report maintains a “BUY” recommendation for the stock.
