| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
A leading construction firm reported a robust financial performance for the first half of FY26 (6MFY26), with core net profit surging 21% year-on-year to RM22 million. This impressive growth was underpinned by a record high revenue of RM180 million, marking a substantial 124% year-on-year increase. The results were broadly in line with expectations, accounting for 27% of the full-year forecasts from both the investment bank and market consensus.
Performance Review
The significant revenue growth was primarily fueled by stronger contributions from Mechanical, Electrical, and Plumbing (MEP) services projects, notably through SJEE. While the turnkey contractor segment continued to be the largest revenue contributor at 41% of the group’s total, the M&E services segment accounted for a significant 39% of the 6MFY26 revenue. Despite the strong top-line performance, the group’s EBITDA margin saw an 8 percentage point year-on-year decline, settling at 23.2% for the period.
Future Outlook
Analysts anticipate a stronger earnings momentum in the second half of FY26. This positive outlook is supported by a substantial unbilled construction order book of RM1.2 billion, complemented by SJEE’s RM244 million order book. Approximately RM360 million from ongoing construction projects are expected to be recognized fully by the end of FY26. Momentum for new contract wins is also expected to accelerate, bolstered by a significant RM1 billion tender book, diversified across data center (37%), residential (31%), and government-related buildings (31%) projects. The investment bank highlighted the company’s strategic expansion into the fast-growing data center sector and robust order book visibility from existing anchor clients as key drivers for future performance.
Investment Recommendation
The investment bank has maintained its “BUY” rating on the stock and reaffirmed its 12-month target price at RM0.75, based on a target 18x PE multiple on FY27E EPS. Key risks to this positive recommendation include potential slower order book replenishment and the possibility of project cost overruns.
