SSB8: Construction Firm Secures Maiden Hospital Contract, Enhancing Order Book

A construction company has successfully secured its maiden hospital project, a RM15.2 million sub-structure contract for a 7-storey hospital in Melaka. This strategic win is poised to significantly enhance the firm’s outstanding order book and provides a strong foundation for future growth in the healthcare construction sector.

Contract Details and Financial Impact

The contract, awarded to the company’s wholly-owned subsidiary, involves comprehensive early-stage civil works. These include site clearance, earthworks, and piling/pilecap construction. The project is slated for commencement in December 2025 with an expected completion by September 2026. This initial phase of work is estimated to contribute approximately RM2 million in net profit, based on an assumed 13% net profit margin for hospital projects.

This latest win brings the company’s year-to-date contract acquisitions to RM137 million, representing 13% of its projected full-year FY26E replenishment assumption of RM1.1 billion. With this new addition, the outstanding order book now stands at a robust RM1.5 billion, translating to a substantial 6.6 times its FY25 revenue cover.

Future Growth and Strategic Outlook

The early-phase nature of the hospital development strategically positions the company for potential further wins, including subsequent superstructure and mechanical, electrical, and plumbing (MEP) work packages, estimated to be worth an additional RM145 million. Beyond this project, replenishment prospects remain strong, supported by a sizeable RM800 million tender pipeline. This pipeline is notably diversified, comprising data center (38%), residential (31%), and government-related buildings (31%) segments. The firm is actively pursuing strategic expansion into the fast-growing data center sector, complementing its robust order book visibility from existing anchor clients.

However, potential risks identified include unforeseen changes in government policies and fluctuations in raw material prices, which could impact project profitability and timelines.

Analyst Recommendation

Analysts are maintaining a “BUY” rating on the stock, with a target price of RM0.75. This valuation is pegged to an 18x price-to-earnings multiple on FY27E earnings per share. The positive outlook is primarily driven by the company’s strategic move into the data center sector and its strong, visible order book.