BERHAD: Robust Financial Performance Driven by Strong Construction and Strategic Overseas Growth

A leading Malaysian conglomerate concluded its fiscal year 2025 on a strong note, reporting a fourth-quarter net profit of RM332.1 million, an 11.2% year-on-year increase and a significant 34.6% rise quarter-on-quarter. This robust performance pushed its full-year FY25 net profit to RM1.0 billion, up 10.0% year-on-year, aligning closely with both internal and consensus expectations. The impressive results were primarily attributed to the improved output from its domestic engineering & construction (E&C) division and strong contributions from overseas property ventures.

Performance Review

Fourth-quarter revenue climbed by 2.6% year-on-year, largely propelled by a significant surge in domestic construction activity. The domestic E&C revenue soared 122.4% year-on-year to RM1.5 billion, representing 38.6% of the total E&C revenue. This explosive growth was underpinned by a substantially expanded domestic order book, which nearly tripled from RM7.0 billion to RM19.0 billion. However, softer demand in its domestic property division, partly due to recent US tariff announcements, somewhat tempered overall gains.

The group’s 4QFY25 net profit saw a 21.9% year-on-year increase, benefiting from enhanced contributions across both domestic E&C and overseas property sectors. A strategic shift in project focus towards domestic contracts led to steady margin improvements, with the net margin reaching 6.9% compared to 6.3% a year ago. Overseas property ventures, particularly Vietnam’s quick turnaround projects (QTPs) like the Eaton Park project, significantly boosted net profit with robust sales and higher margins, recording a 68% surge in their contribution.

Future Outlook

The company maintains excellent earnings visibility, supported by total new project wins amounting to RM24.9 billion in FY25 and an impressive outstanding construction order book of RM38.4 billion. Its pipeline for future projects remains highly encouraging, with an additional RM6-10 billion in new wins anticipated by the end of calendar year 2025. These opportunities span various sectors, including water infrastructure, data centers, renewables, and other key projects across Malaysia, Australia, and Taiwan.

In the property division, unbilled sales are estimated at RM8.0 billion, with an ambitious target of RM5.5 billion in sales for FY26, driven by sustained momentum from Vietnam QTPs and new mid-upper range launches in Malaysia. Several more data center packages are expected to be awarded before year-end, further strengthening the group’s prospects. Moreover, the company is actively developing recurring income streams through strategic investments in renewable energy, water, and digital infrastructure projects, such as the Ulu Padas Hydro project, the Northern Perak Water Supply Scheme, and solar farms equipped with battery storage.

Investment Recommendation

PublicInvest Research reaffirms its “Outperform” rating on the stock, citing the robust order book, improving margins, and expanding project pipeline both locally and internationally. The investment bank maintains an unchanged target price of RM6.20 per share.