BNASTRA: Investment Bank Upgrades Outlook Following Major Contract Win
Investment Bank | TA SECURITIES |
---|---|
TP (Target Price) | RM0.25 (+25.0%) |
Last Traded | RM0.20 |
Recommendation |
A recent research report from TA SECURITIES indicates a positive outlook for the company following its subsidiary, Binastra Green Energy Sdn Bhd, securing a significant RM305 million Engineering, Procurement, Construction, and Commissioning (EPCC) contract. The contract, awarded by Bahru Stainless Sdn Bhd, involves the development of a large-scale solar and battery storage facility in Pasir Gudang, Johor, with project completion anticipated within nine months.
New Contract Fuels Robust Order Book
This latest win is a substantial boost to the company’s financials, bringing its year-to-date new order book to RM1.8 billion. This figure accounts for 45.5% of TA SECURITIES’ FY26F new order book replenishment assumption of RM4.0 billion. The incorporation of this contract elevates the outstanding order book to a record-high level of approximately RM4.9 billion, providing a robust 3.2x cover for its FY26 forecasted revenue. Based on a conservative 8% net margin, this new job is estimated to contribute approximately RM24.4 million to earnings over the project period.
Strategic Diversification and Future Prospects
TA SECURITIES maintains a positive stance on the company’s near-term order book replenishment prospects. The group is expected to secure the remaining balance of its FY26 target in the coming months, supported by an estimated RM2.0 billion worth of potential job wins from recurring clients like Exsim and Maxim, for upcoming high-rise residential projects in Johor. Additionally, the company is reportedly eyeing RM200-300 million in potential contracts from LSS5-related solar projects.
This maiden entry into the solar-related EPCC segment marks an important strategic diversification, extending beyond its traditional building and civil construction portfolio. This move is viewed positively as it positions the group to capitalize on opportunities under Malaysia’s National Energy Transition Roadmap (NETR) and Solar Energy Self-Consumption (SelCo) programme. It is also expected to strengthen the company’s technical competency in large-scale solar and battery storage systems, broadening its earnings base, improving margin resilience, and enhancing its track record in the renewable energy engineering space.
Earnings Forecasts Revised Upward
Given the relatively shorter construction cycle of this project (9 months compared to the typical 24-48 months for high-rise developments) and accelerated project recognition, TA SECURITIES has revised its order book burn rate assumptions. Consequently, its net earnings forecasts for FY26 and FY27 have been raised by 1.3% and 6.4%, respectively.
Following these earnings revisions, TA SECURITIES has raised its target price to RM0.25 and reiterated its “BUY” recommendation. The positive assessment is anchored by the company’s long-standing relationships with major clients ensuring a steady project flow, its strategic positioning as a key beneficiary of the property and construction upcycle, and the robust earnings visibility and growth prospects underpinned by a resilient and expanding order book.