| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
Overview
A leading construction and engineering firm has reported a robust first-half performance for FY26, with its topline surging by 59% year-on-year and bottomline increasing by 31%. Core profit for the period reached RM53.6 million, accounting for 41% of full-year FY26 estimates, a result deemed to be in-line with expectations by TA Securities. This strong showing is attributed to anticipated higher progress billings from existing projects and the successful commencement of newly secured ventures.
Performance Review
Despite the impressive growth, the firm’s construction PBT margin experienced a slight compression, dropping to 9.3% from 13.3% previously, primarily due to lower-margin data centre jobs. The second quarter of FY26, however, saw a 13% quarter-on-quarter jump in core profit alongside a 54% increase in revenue. The company also declared an interim net dividend per share (NDPS) of 3.0 sen.
Strategic Positioning and Outlook
The outlook for the Malaysian construction sector remains positive, buoyed by government-led infrastructure spending, growing private sector investment, and an increasing emphasis on green and sustainable developments. The company is strategically aligned to capitalize on these tailwinds, particularly through its focus on Green RE and GBI-certified projects, which enhance asset value and meet evolving regulatory standards. As of August 21, 2025, the firm’s outstanding orderbook stood at a formidable RM4.6 billion, providing a robust 3.2x cover of its FY26 forecasted revenue. Future orderbook replenishment is expected to be driven by key clients and major projects in Johor (RM3.3bn potential awards) and Klang Valley (RM1.2bn).
Investment Recommendation
TA Securities maintains its recommendation on the stock, setting a target price (TP) of RM0.25, representing a 25.0% upside from its last traded price of RM0.20.
Key Risks
Potential risks to this positive outlook include weaker flows of construction jobs from both public and private sectors, possible project cost overruns, and rising costs of building materials.
