EXSIMHB: Hospitality Expansion and Robust Order Book Propel Earnings Forecasts, Target Price Raised
| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.40 (+51.5%) |
| Last Traded | RM0.260 |
| Recommendation |
An investment bank has significantly revised its earnings forecasts and increased its target price for a hospitality and construction services entity, citing strong progress in its own-operate hotel segment, an expanding short-stay rental business, and a healthy order book in its fit-out division.
Performance Review and Growth Drivers
The company recently completed a rights issue, securing RM250.2 million, which provides clear funding for its own-and-operate hospitality asset strategy. Key projects, including the refurbishment of Corus Hotel and the acquisition of Tower E Hotel at Empire City Damansara, are reportedly on track. Management expects both hotels to be fully operational by the third quarter of fiscal year 2026 (3QFY26), contributing meaningfully to earnings from FY27 onwards. Post-refurbishment, target occupancy rates are set at 70% (up from 30%) and an average daily room rate (ADR) of RM350 (up from RM150), marking a significant shift from a capital expenditure phase to a recurring income model.
The short-stay rental segment, “Mana Mana,” continues to exhibit robust growth. As of December 2025, the company managed 1,582 keys, an increase from 1,002 keys in June 2025, with 520 keys already contributing to earnings. An additional 2,426 keys are slated for transfer into the group by 3QFY26, bringing the total to 4,008 keys under management. The company aims to manage over 10,000 keys within the next five years, which could potentially generate approximately RM21.9 million in annual net earnings. This segment is also benefiting from increased bookings from travel agencies and corporate clients, expanding its addressable market, and is poised to gain from the government’s “Visit Malaysia Year 2026” initiative.
In its interior fit-out segment, the company maintains a healthy outstanding order book of RM200.1 million, representing a 1.4x revenue cover based on FY25 construction segment revenue. Year-to-date FY26 new job wins total RM48.8 million. Management anticipates sustained job replenishment momentum, supported by a steady pipeline of internal awards from its parent group’s property launches, participation in larger tenders, and contributions from external clients. Net margins for this segment are expected to remain resilient at 15-20% due to short project turnarounds and strong relationships with the parent group.
Future Outlook and Recommendation
Consequently, core net earnings forecasts have been raised by 24.1%, 20.0%, and 2.6% for FY26, FY27, and FY28, respectively. These revisions integrate projected earnings from the operational hospitality assets, including the Summit USJ hotel, which is on track for reopening by 4QCY26, and a refined order book burn rate for the fit-out segment.
The investment bank has increased its Sum-of-Parts (SOP)-derived target price to RM0.40 from RM0.30, indicating a potential upside of 51.5% from the last traded price of RM0.260. The hospitality division is valued at 18x FY27 earnings, while the design and fit-out segment is based on 15x PE. Despite some initial pre-stabilisation earnings uncertainty and lower liquidity considerations for hotel assets, a buy recommendation is maintained.
The positive outlook is underpinned by the company’s 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 creation through a hospitality Real Estate Investment Trust (REIT).
