HAWK: Major Contract Win Bolsters Orderbook and Future Earnings
| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
A recent significant contract win is set to provide an earlier-than-expected boost to earnings and substantially strengthen the company’s position in the utilities segment. The company’s wholly-owned subsidiary has secured eight new contracts totaling RM60.97 million for subcontract works under Tenaga Nasional Berhad’s (TNB) asset development and distribution network division. These contracts, which span from October 2025 to October 2026 with an option for a one-year extension, expand the group’s EPCC capabilities in the power infrastructure sector and are expected to positively contribute to FY25 earnings.
Performance Review
This latest award has significantly expanded the group’s EPCC orderbook, growing from RM94.8 million to an impressive RM155.8 million. This expansion supports the view that FY26 orderbook forecasts remain well on track. The newly secured contracts are estimated to carry a gross margin of 20% and a net margin of approximately 10%, aligning with the company’s existing EPCC projects. The consistent flow of new contracts reinforces the company’s strong execution track record and its strategic diversification beyond its traditional Oil & Gas segment. Notably, with these contracts commencing in the fourth quarter of FY25, a portion of the revenue will be recognized earlier than initially anticipated.
Future Outlook and Valuation
TA SECURITIES has adjusted its FY25 earnings forecast upwards by 10.6%, projecting that approximately RM10 million (17%) of the newly secured RM60.97 million contract will be recognized in 4QFY25. Despite this adjustment, FY26 and FY27 forecasts remain unchanged, as a gradual orderbook build-up was already factored into previous projections.
The investment bank maintains a positive outlook, emphasizing the company’s strengthened orderbook and potential for further upside from additional future order wins that could exceed current forecasts. Based on its analysis, TA SECURITIES has issued a BUY recommendation with a target price of RM0.25. The last traded price was RM0.20.
