| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM6.31 (+14.1%) |
| Last Traded | RM5.53 |
| Recommendation |
A leading construction firm has significantly expanded its order book, securing a substantial new contract for data centre infrastructure works. This latest achievement reinforces the company’s strong pipeline and has led analysts at TA Securities to reiterate their “BUY” recommendation, maintaining an unchanged target price.
The company recently clinched a RM386 million general contractor site infrastructure contract for two projects awarded by a US-headquartered multinational technology company. These projects are believed to be related to data centre developments, with construction slated to commence on December 19, 2025, and completion targeted for February 2027.
Strong Performance and Order Book Growth
This marks the fifth job win for the firm in the current financial year (FY25), elevating its year-to-date new job wins to an impressive RM4.9 billion. This figure represents 98% of TA Securities’ forecast and 89% of the upper end of management’s targeted order book replenishment range of RM4.5 billion to RM5.5 billion. Following this latest award, the outstanding order book now stands at approximately RM6.4 billion, equivalent to 1.8 times its FY24 construction revenue. Analysts estimate these new contracts alone could generate a net profit of RM23.2 million over their duration, based on a typical net margin of 6% for data centre projects.
Future Prospects and Strategic Positioning
The firm’s early-stage engagement as a sub-contractor for site infrastructure works positions it favorably for potential follow-on awards. These could cover core and shell, as well as mechanical and electrical (M&E) scopes for the two data centre projects. Such additional opportunities could potentially add another RM2.0 billion in new job opportunities for the firm, excluding the existing site infrastructure contract value. This strategic positioning is expected to enhance its new job win prospects into FY26, especially within the thriving advanced technology park (ATP) industry.
Analyst Recommendation and Risks
TA Securities maintains its “BUY” recommendation with an unchanged target price of RM6.31. This valuation is based on 22x CY26 EPS and incorporates a 3% ESG premium, aligning with the firm’s 4-star ESG rating. The last traded price for the stock was RM5.53, implying a potential upside of 14.1% to the target price. While TA Securities keeps its FY25 new job win assumption unchanged at RM5.0 billion, they will revisit their FY25 new order book replenishment assumptions should stronger job win momentum emerge as the financial year progresses. Key downside risks highlighted include slower-than-expected new job wins, delays in large-scale infrastructure project roll-outs, and weaker-than-expected property sales.
