BNASTRA: New Data Centre Contract Bolsters Order Book, Analyst Reaffirms Buy Rating

A recent contract win has significantly bolstered the order book of a prominent construction group, reinforcing its earnings visibility and prompting analysts to reiterate a positive outlook. The group’s wholly-owned subsidiary recently secured a RM188.5 million mechanical and electrical (M&E) fit-out contract for a data centre in Putrajaya.

Order Book Growth and Earnings Visibility

This latest achievement brings the group’s year-to-date (YTD) new contract wins to RM2.0 billion, achieving approximately 50% of its FY26F new order book replenishment target of RM4.0 billion. Consequently, the outstanding order book has expanded to around RM5.1 billion, providing a robust 3.3x cover on its FY26F revenue forecast and ensuring strong earnings visibility for the next three years.

While the M&E contract for the data centre is expected to yield lower margins due to its technical complexity, likely requiring subcontracting to specialised firms, it is a fast-turnaround project with a completion timeline of under a year. This contract is estimated to contribute approximately RM5.7 million to the group’s earnings over its duration.

Future Prospects and Strategic Positioning

Analysts maintain a positive view on the group’s near-term order book replenishment outlook. The remaining balance of its FY26 new contract target is expected to be secured in the coming months, supported by a potential RM2.0 billion pipeline from recurring clients for upcoming high-rise residential projects and RM200-300 million from LSS5-related solar projects. These prospects collectively underpin confidence in the group’s ability to sustain its strong order book momentum in FY26.

Furthermore, the recent contract strengthens the group’s relationship with a major data centre operator, positioning it as a frontrunner for future data centre developments. With the operator having earmarked over RM2.0 billion for data centre expansion across the Klang Valley, the group stands to benefit from potential additional projects, which could translate into new job opportunities worth up to RM600 million from an estimated 30MW data centre pipeline.

Analyst View and Valuation

Analysts are reiterating their BUY call on the group with a target price (TP) of RM0.25, predicated on a 17x P/E multiple. Despite a recent share price pullback, the current valuation presents a compelling opportunity for bargain hunting. The group is currently trading at 13.1x its CY26 EPS forecast, representing a 24% discount to the mid-to-large-cap peer average. Key factors supporting the positive recommendation include its long-standing relationships with major clients, strategic positioning as a beneficiary of the property and construction upcycle, and robust earnings visibility with strong growth prospects.