HOLD: Facilities Management Win Boosts Order Book, Analyst Recommends ‘Hold’ Amidst Narrowing Upside
| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.805 (+8.1%) |
| Last Traded | RM0.745 |
| Recommendation | HOLD (from BUY) |
A facilities management provider has secured a significant five-year contract valued at RM82.5 million, bolstering its order book and reinforcing future earnings visibility. However, despite the positive development, an investment bank has downgraded its recommendation for the stock to ‘Hold’, citing a narrowing upside following a pre-announcement share price rally.
Contract Details
The contract was awarded to Ambang Wira Facilities Sdn Bhd, a wholly-owned subsidiary of the company, by the Public Works Department. It involves the facilities management and maintenance of buildings within Kompleks E, Ministry of Education and the Department of National Unity and Integration, Precinct 1, Putrajaya. The agreement is set to commence on January 1, 2026, and will run until December 31, 2030.
Financial Impact
This new contract is expected to significantly expand the company’s order book from RM609.8 million to RM692.3 million. This substantial increase provides robust earnings visibility, with a 1.7x cover ratio over its FY25 revenue. Analysts estimate the contract will contribute approximately RM8.3 million in profit throughout its duration, based on an assumed 10% margin, and represents 19.3% of the projected full-year revenue target for FY26.
Analyst’s View and Recommendation
Despite the positive implications of the contract win, which was within the investment bank’s expectations, the forecast for the company’s financial performance has been maintained. The investment bank has downgraded its recommendation from ‘Buy’ to ‘Hold’ with an unchanged target price of RM0.805. The adjustment in rating comes as the share price had already rallied ahead of the official announcement, thereby limiting the potential upside for investors. The target price is derived using a P/E ratio of 10.0x applied to the mid-FY27f EPS of 8.05 sen. The last traded price for the stock was RM0.745.
