| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.61 (+45.3%) |
| Last Traded | RM0.42 |
| Recommendation |
An engineering firm has announced significant contract wins, propelling its year-to-date new job acquisitions past expectations and leading to upward revisions in its future earnings forecasts. The positive development has prompted TA Securities to reiterate its “Buy” recommendation, with a revised target price of RM0.61.
Key Contract Wins Bolster Order Book
The company recently secured two new contracts, collectively valued at RM130 million, from an undisclosed client. These agreements involve the design, engineering, construction, installation, testing, commissioning, and material supply for the expansion of an existing 275kV Consumer Landing Station at a data centre in Johor. The projects are slated for execution in three phases, with Phase I commencing in December 2025 and targeted for completion by April 2026. The subsequent phases are expected to conclude within seven months of the client’s instructions.
These latest contract acquisitions have elevated the firm’s FY25 year-to-date new job wins to a record RM601.6 million, significantly surpassing TA Securities’ initial replenishment assumption of RM500 million. This achievement boosts the group’s outstanding order book to approximately RM681.2 million, providing a strong 2.9x cover of its FY25 revenue forecast and ensuring robust near-term earnings visibility. The RM130 million contracts alone are estimated to contribute approximately RM19.5 million to earnings over their execution period, based on an assumed net margin of 15%.
Positive Outlook and Valuation
Looking ahead, the company is well-positioned to maintain its strong new order book momentum into the next financial year, underpinned by a robust tender book of around RM600 million. The ongoing demand for power infrastructure works, particularly within Malaysia’s burgeoning data centre ecosystem, is expected to drive further job wins and earnings growth through FY26.
TA Securities has adjusted its FY25 new job win assumption upward to RM601.6 million from RM500 million, reflecting the stronger-than-expected replenishment year-to-date. While the FY25 earnings forecast saw a marginal reduction of 0.2% due to recalibrating the order book burn rate to account for larger job wins secured later in the year, earnings forecasts for FY26 and FY27 have been positively revised upward by 4.6% and 4.7% respectively.
Based on these earnings revisions, TA Securities has increased its target price to RM0.61, up from the previous RM0.58, maintaining its “Buy” call. The investment bank highlighted the company’s strong position in the DC power infrastructure construction sector and its scalable, integrated M&E capabilities as key reasons for its optimistic outlook.
