BNASTRA: Order Book Hits Record High on Major Data Centre Contract, Buy Rating Maintained

Investment bank TA Securities has maintained its “Buy” recommendation, despite a slight adjustment to future earnings forecasts, following a significant new contract win that propelled the company’s outstanding order book to an all-time high. The target price is set at RM2.80, with the last traded price noted at RM2.14.

Key Contract Win

The company recently secured a RM503 million contract from Exsim Sri Permai Sdn Bhd for a data centre (DC) development located along Jalan Sri Permaisuri, Cheras. This marks the first job win for the current financial year (FY27) and is the fourth DC-related project awarded by Exsim to the company. Cumulatively, DC-related contract wins from Exsim now total approximately RM1.9 billion across six projects, highlighting the company’s strong execution track record in the DC construction space. Construction is slated to begin on February 19, 2026, with an estimated 20-month completion period.

Record Order Book and Earnings Visibility

This latest win significantly boosts the total outstanding order book to a record high of approximately RM7.0 billion. This enlarged unbilled order book translates into a strong 7.7x cover of the company’s FY25 revenue, providing clear earnings visibility over the next four years. The DC project’s scope encompasses both core and shell works, as well as the Mechanical & Electrical (M&E) package, with the latter expected to be subcontracted to specialized contractors. Assuming a net margin of 4%, consistent with historical margins for EXSIM-related DC projects, the firm estimates the contract will contribute roughly RM20.1 million in net profit over its construction period.

Future Outlook and Capacity Management

Malaysia’s data centre market is poised for substantial growth, with total capacity projected to expand to 6GW, concentrated in Johor and the Klang Valley. This presents an estimated RM11 billion worth of new DC construction opportunities over the next four years, reinforcing a positive view on the company’s job replenishment prospects, particularly from multinational hyperscalers. However, TA Securities has revised its new job win assumptions for FY27 and FY28 downwards slightly (by 2.0% and 4.8%, respectively, from RM3.0 billion to RM2.5 billion) to reflect near-term capacity constraints, as management is expected to prioritize the execution and delivery of existing projects. Earnings estimates for FY26 remain unchanged as project execution assumptions are intact.

Valuation

The investment bank reiterates its “Buy” call, citing three key factors: (i) strong, long-standing relationships with major clients that provide a steady project flow, (ii) strategic positioning as a key beneficiary of the property and construction upcycle, and (iii) robust earnings visibility and growth prospects, supported by a resilient and expanding order book. The target price of RM2.80 (revised from RM2.85) is based on a targeted 17x price-to-earnings (PE) multiple of its CY26 EPS.