| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
A recent investment bank research report indicates a strong financial performance, with core net profit for 2025 significantly exceeding expectations. The company recorded a 2025 core net profit of RM47 million, a 52% year-on-year increase, which accounted for an impressive 110% of the full-year forecasts.
Performance Review
This exceptional performance was primarily driven by a higher 2025 revenue of RM721.2 million, marking an 11.2% year-on-year growth. The energy division emerged as a key contributor, exhibiting a robust 51.6% increase in performance. This surge was partially counteracted by a weaker industrial solutions division, which saw a 41% decline. The report highlights that the company’s EBITDA margin expanded by 2.7 percentage points to 20%, a testament to the higher operating leverage achieved within the energy segment. The earnings beat was largely attributed to stronger-than-expected energy activities.
Quarterly Trends and Challenges
Despite the strong annual performance, the fourth quarter of 2025 experienced a moderation. Core net profit for 4Q25 decreased by 29.6% quarter-on-quarter to RM12.9 million. This decline was primarily influenced by higher interest expenses and an increased operating loss from the industrial solutions segment, suffering from low utilization rates. Furthermore, 4Q25 revenue saw a 10.7% quarter-on-quarter dip to RM193 million, largely reflecting softer oil and gas activity during the monsoon season. Despite the weaker top-line, the EBITDA margin for the quarter remarkably improved by 7.1 percentage points quarter-on-quarter to 25.5%, underpinned by higher margins from the energy segment.
Future Outlook and Investment View
Looking ahead, the report anticipates that first-quarter 2026 earnings may moderate further, as energy-related activities typically experience a seasonal slowdown during the monsoon period. However, the company is poised to benefit from robust domestic offshore activity, supported by a healthy order book of RM4 billion. This significant order book provides strong earnings visibility for the next three years. Key risks identified include potential fluctuations in work orders, unforeseen delays in the KLIA BHS project, and possible project cost overruns.
In light of these factors, TA SECURITIES has issued a BUY recommendation for the company, with a target price (TP) of RM0.25, representing a potential upside of 25.0% from the last traded price of RM0.20.
