| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
Overview
TA Securities has reiterated its “BUY” recommendation for a prominent engineering and construction group, raising its target price to RM0.25, reflecting a potential upside of 25% from its last traded price of RM0.20. The revised outlook comes on the back of the group’s significant new project wins and a robust outstanding order book, which analysts believe will ensure solid earnings visibility for the foreseeable future.
Recent Project Wins and Performance
The group, through its wholly-owned Australian subsidiary, DTY Joint Venture with Samsung C&T Corporation, recently secured the Balance of Works (BOW) Package for Marinus Link Stage 1 in Australia. This substantial project, with a total value of AUD994mn (approximately RM2.7bn), is expected to contribute around RM94mn to the group’s share. The scope of this major construction tender encompasses critical civil, structural, and electrical works, including the installation of various overhead conductors and cables. This successful bid reinforces the group’s strategic focus on renewable energy and major infrastructure development.
Order Book Strength and Future Outlook
Following this significant win, the group’s outstanding order book has soared to RM24.7bn. This impressive figure translates to a strong 3.7x cover of its FY25 construction segment revenue, providing solid earnings visibility for the next three years. Analysts anticipate continued job replenishment, particularly given the group’s strategic positioning in renewable energy and water infrastructure markets, which are experiencing robust growth.
The Marinus Link project alone is estimated to bring in at least RM14.8bn for the group’s share, with an expected PBT margin of 5% over its duration, which is projected to be completed in 2026. Furthermore, the group is pursuing a 345 km undersea and underground electricity and data interconnector project in North West Tasmania to Victoria’s Latrobe Valley, comprising 250 km of subsea cables across the Bass Strait. This project aligns with national energy transition goals and is expected to further enhance the group’s job replenishment prospects. The group is also a strong contender for the Marinus Link Phase 2, which could add an estimated RM75mn in net earnings.
Investment Thesis
TA Securities highlighted the group’s strong track record in successfully delivering highly complex projects and its strategic market position in Australia’s burgeoning infrastructure and renewable energy sectors. The continuous flow of contract rollouts, coupled with the group’s proven capability in executing large-scale projects, underpins the positive outlook. The investment bank reiterates its belief that the group’s current valuation remains attractive, especially considering its robust balance sheet and strong pipeline of future projects, which are set to drive sustained growth.
