INTA: Analyst Reaffirms ‘Buy’ on Construction Player Amidst Resilient Order Book and Strategic Growth
| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.78 (+104.5%) |
| Last Traded | RM0.380 |
| Recommendation |
TA SECURITIES has maintained its “Buy” recommendation on a prominent construction group, setting a target price of RM0.78, representing a significant 104.5% upside from its last traded price of RM0.380. The positive outlook is underpinned by the company’s resilient order book, strategic project pipeline, and improving profitability, despite minor adjustments to its near-term earnings forecasts.
Performance and Outlook Adjustments
The investment bank has revised its earnings forecasts, with FY26 net profit seeing a slight upward adjustment of 1.8%, while FY27 is revised down by 3.1%, and FY28 sees an upward adjustment of 2.2%. These revisions stem from a fine-tuning of new job win assumptions for FY26-FY28, which have been pared down to RM850mn from an earlier RM1.0bn. This adjustment reflects the company’s strategic prioritization of executing its already substantial existing order book and a revised order book burn rate.
Solid Order Book and Tender Pipeline
The company continues to demonstrate strong momentum in job replenishment. In FY25, it secured approximately RM865.2mn in new contracts. Its robust outstanding construction order book stands at RM1.8bn, providing a healthy 2.8x cover for its FY25 construction revenue. Furthermore, a sizeable tender book of RM4.9bn, primarily comprising high-rise residential projects from established clients, indicates a sustained pipeline of potential awards. Management anticipates several tenders to be finalised soon, contributing to a healthy pace of order book replenishment.
Strategic Expansion and Property Development
In a strategic move, the company has been invited to tender for a data centre (DC) underground works contract valued at approximately RM200mn. This represents its second attempt to enter the rapidly expanding DC construction segment, a potential win that could significantly strengthen its track record and future prospects in this specialized area.
On the property development front, the maiden project, Senuri Residences (GDV: RM205mn), has achieved full take-up for its open-market units, serving as a key earnings contributor. Looking ahead, incremental earnings uplift is expected from the planned launch of Seiring Setia (estimated GDV: RM200mn) in 2QFY26, and the earlier-than-expected launch of the Aliran Retsu project (estimated GDV: RM300-400mn) in 3QFY26 (moved up from 1QCY27 previously).
Investment Rationale
TA SECURITIES reiterates its positive stance, citing three key factors: the company’s position as a direct beneficiary of the robust domestic property sector, strong earnings visibility backed by a resilient order book, and improving profitability. The target price of RM0.78 is derived from an unchanged 8x CY27F Price-to-Earnings (P/E) multiple.
