Results Review

• BNASTRA’s 9MFY25 core earnings of RM65mn came in at 70.1% and 73.0% of ours and the street’s full-year estimates, respectively. These results are deemed in line with expectations, as a stronger earnings performance is anticipated in 4QFY25, driven by increased revenue recognition from recently secured construction projects.

• YoY, its 9MFY25 revenue and core net profit charted a significant growth of 149.6% and 156.1%, respectively. This robust performance was attributed to accelerated progress billing of construction projects, underpinned by a substantial expansion in the orderbook since FY24.

• Nonetheless, 3QFY25 core earnings rose modestly by 6.2%, despite a commendable 15.2% increase in revenue. The slower earnings growth reflects the lower margins typically associated with its data centre and Sabah construction projects compared to other projects in the Klang Valley (KV).

Briefing Highlights

• Currently, BNASTRA’s total unbilled orderbook stands at RM3.7bn, equivalent to 8.7x its FY24 revenue, ensuring robust earnings visibility through FY29.

• For FY26, BNASTRA is targeting at least RM5bn in new project wins, driven by pent-up demand for housing properties in the KV and Johor Bahru regions. The group’s aggressive orderbook expansion strategy is further propelled by its key clients’ project launches in southern regions, contributing c.RM2bn per annum in gross development costs over the next two years. Furthermore, potential new job wins in the KV are expected to collectively amount to RM3bn.

• On the environmental, social, and governance (ESG) front, BNASTRA continues to strengthen its presence. Following the successful securing of two new sewage treatment plant (STP) projects in FY25, the group remains actively engaged in tendering for more engineering, procurement, construction, and commissioning contracts in the STP and solar farm segments. These initiatives reflect the group’s commitment to reducing carbon footprints and fostering sustainable development through its involvement in green construction projects.

Impact

• No changes to our FY25-27F earnings estimates.

Valuation

• We maintain our Buy call on the stock with an unchanged TP of RM2.25, based on PER 18x CY25 earnings. Our positive stance on BNASTRA is anchored by several key factors: (i) its strong and enduring relationships with major clients, (ii) its strategic position as a key beneficiary of the property sector’s growth momentum, (iii) robust earnings visibility and growth potential, driven by a resilient and expanding order book.

Source: TA Research - 20 Dec 2024