| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
A recent research report highlights a robust outlook for a prominent construction firm, with TA Securities maintaining a ‘BUY’ recommendation and setting a target price of RM0.25. This target represents a significant 25.0% upside from the last traded price of RM0.20, underpinned by expectations of strong earnings momentum, particularly for fiscal year 2026.
Performance Review and Project Pipeline
The positive sentiment stems from the company’s well-managed project pipeline and strategic expansion efforts. Its outstanding order book currently stands at a substantial RM1.4 billion, providing significant revenue visibility. This diverse portfolio includes 58% from Platinum Victory projects, 23% from other residential developments, 15% from data centers, and 4% from Radium projects. Management also revealed an active tender book of RM648 million, with 60% of these bids targeting government-related projects such as flood mitigation works and public buildings, and the remaining 40% for private sector initiatives including residential and basic infrastructure projects. The firm’s operational efficiency, contributing to cost efficiencies, is also noted as a key factor in its strong financial positioning.
Strategic Expansion into Data Centers
A significant driver of future growth is the company’s strategic focus on the fast-growing data center (DC) sector. Its DC order book has notably doubled quarter-on-quarter to RM214 million, following recent contract wins totaling RM122 million from two US-based DC clientele project sites. The company continues to actively tender for new DC projects, with an RM384 million tender book, including projects for existing customers and a new Australia-based DC client in Cyberjaya. Management aims to sustain its SJEE division’s DC order book between RM200-300 million, which is projected to contribute 35-40% to the group’s annual revenue.
Future Outlook and Key Risks
Looking ahead, the firm anticipates rolling out an additional RM510 million worth of direct negotiation projects in FY26, prominently including a RM210 million construction contract for a Radium hospital in Melaka. This robust pipeline, coupled with strong order book visibility from anchor clients, reinforces the positive outlook. However, TA Securities identifies key risks that could impact its ‘BUY’ rating, including unforeseen changes in government policies and potential fluctuations in raw material prices.
