HAWK: Strategic Contract Wins Drive Upward Earnings Revisions and Target Price Increase

Investment firm TA Securities has maintained its “BUY” recommendation on the company, revising its target price upwards following significant new contract acquisitions. The company’s wholly-owned subsidiary recently secured four letters of award for electrical infrastructure works valued at RM41.3 million.

These new subcontracts, awarded by Ibrahim & Sons Engineering Sdn Bhd (IBSE) on January 28, 2026, pertain to vital electrical infrastructure projects for Tenaga Nasional Berhad (TNB). The scope of work encompasses underground cabling, as well as substation construction and upgrading across TNB distribution zones in Perak and Pahang. These contracts, totaling RM41.3 million, are set to span durations ranging from approximately nine months to two years, with completion anticipated by January 2028.

Financial Performance and Outlook

While management indicated that these contracts are not expected to materially impact net assets for FY26, they are projected to contribute positively to group earnings, aligning with the company’s established engineering capabilities. The latest awards have significantly expanded the Group’s Engineering, Procurement, Construction, and Commissioning (EPCC) order book, which now stands at RM232.1 million, up from RM190.8 million. This substantial increase is expected to bolster earnings visibility over the next two years. The contracts are forecasted to yield an estimated gross margin of 20%-30% and a net margin of approximately 10%, consistent with the company’s existing EPCC project benchmarks.

Revised Forecasts and Valuation

In light of the progressive recognition of the RM41.3 million electrical infrastructure contracts, TA Securities has revised its earnings forecasts upwards by 8.9% for FY26 and 2.5% for FY27. This positive revision underpins the updated valuation.

TA Securities raised its target price to RM0.41 per share (from RM0.37 per share), based on an 8.5x FY26F EPS, and notably incorporated a 3% ESG premium into its valuation. The firm reiterated its “BUY” recommendation, citing the strategic positivity of the contracts, which provide incremental earnings uplift and reflect continued progress in expanding the EPCC order book. The consistent contract flow further strengthens the company’s execution track record and supports its ongoing diversification efforts beyond the core Oil & Gas segment.