• We expect continued strong contract replenishment, primarily driven by BNASTRA’s main clients, including EXSIM and MAXIM upcoming launches in Johor. It is also looking to bid for more data centre and solar related projects

• The latest expansion into Johor is seen to be timely, with JS-SEZ likely to spur strong property sales for its clients

• Maintain BUY rating with an unchanged target price of RM2.30

Aggressive contract win target intact

We expect robust contract replenishment to drive sustained earnings growth in FY26, supported by an aggressive pipeline of project launches from its key clients in Klang Valley and Johor. BNASTRA reiterates its RM5bn annual new contracts target for FY26, with RM3bn expected from EXSIM and MAXIM’s upcoming projects in Johor Bahru, strategically located near the Bukit Chagar RTS station. Klang Valley opportunities remain strong, with EXSIM’s multi-year Central Park Damansara development offering RM2bn in potential contracts. BNASTRA is pursuing RM400m worth of contracts in the data centre (DC) and solar sectors, with awards expected in 1HCY25. BNASTRA’s debut venture in Johor with EXSIM is particularly timely, as the recent signing of the Johor-Singapore Special Economic Zone is anticipated to spur property demand, with EXSIM’s focus launches in the flagship zone.

Ongoing DC projects are progressing well

BNASTRA’s DC projects with EXSIM account for c.22% of its RM3.7bn orderbook. The construction is on track to be completed in FY27. The Phase 1 DC has secured a Singapore off-taker for 70% of its capacity, intended for AI cloud services solutions. The client has obtained the necessary Graphics Processing Unit, with c.30% of the servers installed on-site. Discussions are ongoing with a potential Japan DC provider to take up the remaining capacity.

Reiterate BUY with TP of RM2.30

We reiterate our BUY call with an unchanged target price of RM2.30, based on an unchanged target 18x multiple on FY26E EPS. Given its strong performance, we see the potential for a dividend payout in FY25. BNASTRA is trading at an undemanding 14x FY26E PE, a discount to construction sector PE of 22x. We continue to like BNASTRA for its strong competitive advantage as a preferred contractor with key clients and superior profit margins. Key downside risks include slower-than-expected order book replenishment, unforeseen delays, and project margin cost pressure.

Source: Philip Capital Research - 23 Jan 2025