BNASTRA: New RM1.2 Billion Contract Fuels Robust Order Book, ‘BUY’ Rating Maintained
| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM2.85 (+33.2%) |
| Last Traded | RM2.14 |
| Recommendation |
A leading construction company has secured significant new contracts totalling RM1.2 billion for main building and infrastructure works in Johor Bahru. The contracts, awarded by Exsim Lumba Kuda Sdn Bhd for the Causewayz Square development, are expected to significantly bolster the company’s unbilled order book and provide strong earnings visibility for the coming years.
Order Book and Future Visibility
This latest achievement brings the company’s fiscal year 2026 (FY26) year-to-date new job wins to an impressive RM3.3 billion. Consequently, its total unbilled order book now stands at a robust RM5.8 billion, which is approximately 6.1 times its FY25 revenue, providing earnings visibility for the next three years. The FY26 new order book wins have already met around 82% of the company’s RM4.0 billion replenishment target, with the remaining balance expected to be secured in the coming weeks.
The positive outlook is further supported by a strong pipeline of potential awards. This includes an estimated RM600-800 million from recurring client Maxim for upcoming high-rise residential developments in Johor, alongside an external residential tender book valued at about RM500 million.
Financial Impact and Margin Outlook
The newly secured RM1.2 billion job is conservatively estimated to contribute approximately RM106.3 million to earnings over the project period, based on a 9% net margin. Despite this significant win, the investment bank maintains its current earnings forecast, noting that the new contract aligns with its expectations.
Looking ahead, the company anticipates some margin dilution as it ramps up progress billings and construction activities for its RM1.43 billion data centre pipeline, RM222.6 million in EPCC contracts for Sewage Treatment Plants, and RM392.6 million for solar EPCC projects. These projects inherently carry thinner margins compared to traditional building works.
Analyst Recommendation
TA Securities has reiterated its “BUY” recommendation on the company, maintaining an unchanged target price of RM2.85. This valuation is based on 17x calendar year 2026 (CY26) earnings per share (EPS). The investment bank continues to favor the company due to several key factors:
- Long-standing relationships with major clients, ensuring a steady project flow.
- Strategic positioning as a key beneficiary of the property and construction upcycle.
- Robust earnings visibility and growth prospects, underpinned by a resilient and expanding order book.
