| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
TA Securities maintains its “Buy” recommendation on the company, citing robust operational momentum across its shipbuilding, renewable energy, and gas processing segments. The investment bank anticipates a positive outlook, underpinned by a healthy project pipeline and strategic expansions.
Performance Review
The company’s shipbuilding division is demonstrating strong momentum, backed by a significant vessel construction pipeline. This includes three 40-meter USVs and three 85-meter subsea support and maintenance vessels (SSMVs) scheduled for delivery through IQCY26 to IQCY27, with an estimated aggregate sales value of USD130-150 million (RM550-630 million). Management is actively exploring various monetization pathways, including outright sales and charter tenders, enhancing visibility on the division’s earnings and solidifying its marine asset positioning.
Diversification into Renewable Energy
Further diversifying its portfolio, the company is making significant strides in renewable energy. Its 15MW Sibuga Solar Farm project, secured under a 25-year Power Purchase Agreement (PPA) valued at approximately RM180 million, is progressing well, with 92% of land clearing completed and 12% of overall construction achieved. Scheduled for commercial operation by 2H27, this project is set to generate long-term recurring cash flows, aligning with national energy transition goals and establishing a more stable earnings stream.
Gas Processing Expansion
In its gas processing operations in Mexico, both the Papan and Perdiz Plants are currently operating at or near full capacity. The Papan Plant recorded an average throughput of 339mmscfd in 2QFY25, while the Perdiz Plant sustained 180mmscfd. Plans for further expansion are underway, with the Papan Plant targeting an additional ≥150mmscfd capacity, expected to come online by end-2025. These expansions are poised to boost processing capabilities and enhance long-term earnings visibility, supported by Pemex’s broader gas infrastructure development strategy.
Future Outlook and Recommendation
TA Securities expects the group to secure contract extensions for its Jack-up Gas Compression Service Unit (JUGCSU) and the Papan Plant, which will provide additional recurring income. The operational updates across all segments underscore a clear path for sustainable growth and robust cash flow generation.
Given these positive developments and the strong project pipeline, TA Securities has maintained its “Buy” recommendation and raised its target price to RM0.25 per share, representing a 25.0% upside from its last traded price of RM0.20.
