SSB8: Strategic Acquisition and Robust Order Book Underpin Positive Outlook

Following a recent investor briefing, financial analysts expressed a positive outlook on a key player in the construction sector. The company’s near-term prospects are bolstered by a substantial RM1.44 billion outstanding order book, which represents a robust 6.5 times its FY25 revenue, ensuring strong earnings visibility for the foreseeable future. This is further complemented by an active tender pipeline estimated at RM1.0 billion, spanning high-rise construction and mechanical & electrical (M&E) works.

Strategic Growth through Acquisition

A significant driver for the enhanced outlook is the recent acquisition of Nova Pharma Solution Bhd (NPS). This strategic move is expected to considerably boost the group’s capabilities, enabling it to pursue higher-value, more complex, and high-technology projects, particularly within the pharmaceutical and biotechnology sectors. NPS boasts a significantly higher net margin, approximately 40%, compared to the 15% typical for high-rise construction jobs, thereby substantially improving the group’s overall margin profile and future earnings quality.

The acquisition strategically enhances the group’s technical depth and broadens its service offerings into segments with higher entry barriers and superior earnings margins. Nova Pharma’s expertise in engineering consultancy and project management across the full lifecycle—from design to commissioning—positions the group to secure more sophisticated, high-specification projects. This synergy is anticipated to improve tender success rates and facilitate participation in high-technology ventures.

Robust Order Book and Future Prospects

The group’s current outstanding order book, totaling RM1.44 billion, is split between RM1.2 billion for high-rise construction and RM243.9 million for the acquired segment (SJEE). Year-to-date in FY26, the company has secured RM234.8 million in new jobs, fulfilling approximately 24% of its RM1.0 billion new job win target for FY26. Despite some initial slower-than-expected order book replenishment, management is confident in achieving the remaining targets.

The healthy tender pipeline, comprising RM648 million for high-rise construction and RM394.3 million for the SJEE segment, further reinforces positive sentiment. Potential near-term awards include major hospital projects and several residential developments, alongside a significant focus on data centre-related M&E works, an area identified for advanced-stage project awards expected to conclude soon.

Analyst Recommendation

TA Securities maintains a Buy recommendation on the stock, with an unchanged target price of RM0.81, based on a 16x CY27F P/E. The investment bank’s confidence stems from solid earnings visibility, synergistic ties with key partners like Platinum Victory and Radium, strategic exposure to the high-growth data centre sector, and robust double-digit net margins.