BNASTRA: Major Renewable Energy Contract Secured, Poised to Elevate Future Earnings

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Investment Report Summary


BNASTRA: Major Renewable Energy Contract Secured, Poised to Elevate Future Earnings

Investment Bank TA SECURITIES
TP (Target Price) RM0.25 (+25.0%)
Last Traded RM0.20
Recommendation BUY

A prominent player in the construction sector has marked a significant milestone, securing its inaugural solar and battery energy storage system (BESS) Engineering, Procurement, Construction, and Commissioning (EPCC) contract valued at RM305 million. This landmark achievement, representing 12% of the company’s market capitalization and 108% of its FY25 shareholders’ equity, signals a strategic pivot into the burgeoning renewable energy sector, with substantial implications for future earnings and diversification.

Project Details

The comprehensive contract encompasses the design and construction of a 65MWp solar photovoltaic system, comprising a 15MWp rooftop installation and a 50MWp ground-mounted solar array. Complementing this is a 200MWh BESS facility, both to be developed in Pasir Gudang, Johor. The integrated system is engineered with advanced AI-enabled forecasting, real-time optimization, and predictive maintenance capabilities. Upon completion, it is projected to generate approximately 80 million kWh annually, fulfilling about 80% of Bahru Stainless’ power requirements. The project is anticipated to have a nine-month completion timeline.

Financial and Strategic Impact

This RM305 million win is expected to materially boost the company’s financial performance. Assuming an 8% pre-tax profit (PBT) margin, the project is estimated to contribute RM24.4 million in PBT and RM18.6 million in post-tax profit (PAT). Analysts project this new contract to lift FY27F earnings by a notable 10%.

Strategically, this contract marks a pivotal entry point into the renewable energy EPCC space, diversifying the company’s earnings stream beyond its traditional property construction focus. It is also set to strengthen the company’s ESG credentials, establishing a credible platform for recurring solar-BESS deployments among industrial clients. This strategic move is expected to support an ESG-based valuation premium, positioning the company favorably against its mid-cap construction peers.

Outlook and Recommendation

With this significant contract win, the company is poised for robust growth in the renewable energy sector, signaling a positive long-term outlook. Analysts maintain a “BUY” recommendation, underscoring the attractive upside potential offered by this strategic diversification and earnings enhancement.



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