PWRWELL: New Contract Wins Bolster Outlook, Analyst Maintains ‘Buy’ Rating

Malacca Securities has highlighted a recent significant contract win, which is expected to reinforce the company’s revenue stream and support its healthy financial outlook. The firm announced it has secured a RM9.5 million supply contract and purchase order for low-voltage switchboards and related components for a data centre project in Selangor.

Contract Details and Financial Impact

The contract, awarded by an international construction and mechanical & electrical (M&E) firm in October and November, is anticipated to be fully recognized by the first quarter of 2026 (1Q26). Given the short project turnover cycle, most of the contribution from this contract is expected in the financial year 2026 (FY26f). Assuming a blended gross profit margin of approximately 28%, the contract is estimated to generate RM2.7 million in gross profit over its duration. Malacca Securities views the execution risk as manageable, attributing this to the company’s robust balance sheet and strong net cash position. The Group’s outstanding order book is currently estimated at approximately RM117.0 million, equivalent to about 1.0x FY25 revenue, excluding these recent project wins.

Valuation and Recommendation

Despite the new contract, Malacca Securities has maintained its earnings forecast, noting that these recent job wins align with its existing expectations. Consequently, the investment bank has also maintained its “BUY” recommendation with a target price (TP) of RM0.64. This valuation is based on a P/E multiple of 17x, pegged to the mid-FY27F estimated EPS of 3.78 sen. The previous share price was RM0.54.