KERJAYA: Construction Sector Bolstered by Significant Contract Win, Strong Upside Projected
| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
A leading construction group has secured a substantial new contract, significantly enhancing its order book and reinforcing a positive outlook for its future earnings. This development has led analysts to reiterate a “BUY” recommendation, projecting a notable upside for the stock.
Recent Contract Win Fuels Growth
The company recently announced a second major contract win in 2026, valued at RM502.3 million. This latest project involves critical reclamation and dredging works for the Seri Tanjung Pinang Phase 2 (STP2) Phase 2B and 2C development. Scheduled to commence on March 12, 2026, with completion expected within 36 months, this contract is a strategic addition to the company’s portfolio.
The new award represents 35.2% of the company’s FY26 job replenishment target of RM2.0 billion and is considered to be in line with analyst expectations. It is anticipated to contribute approximately 5.6% per annum to the Group’s earnings over the contracted period, assuming low-teen profit margins, thereby providing steady revenue visibility.
Robust Order Book and Strategic Expansion
Following this latest win, the company’s outstanding order book has expanded by 12.9% to RM4.4 billion. This robust order book provides clear earnings visibility for the next three years, underpinning financial stability. Despite this contract being largely factored into FY26 order book replenishment assumptions, the addition further solidifies the company’s revenue pipeline.
Looking ahead, the group is strategically focused on strengthening its project portfolio. This involves leveraging its core construction expertise while actively exploring and expanding into higher-growth segments, particularly data centres and industrial developments. This diversification strategy is expected to drive long-term sustainable growth and enhance its market position.
Analyst Recommendation
Financial analysts maintain a positive stance on the company, reiterating a “BUY” recommendation. The current target price suggests a substantial 25.0% upside from its last traded price, reflecting confidence in the company’s execution capabilities, consistent contract wins, and its strategic pivot towards high-growth segments. The significant order book growth and strong earnings visibility are key factors supporting this optimistic outlook.
