RHB Research lifts Binastra target price to RM3.38 on stronger earnings outlook
KUALA LUMPUR: RHB Research, which has a "Buy" call on Binastra Corp Bhd, has raised its target price to RM3.38 from RM3.10, citing stronger earnings prospects from higher billings on its RM6.7 billion outstanding order book.
On stronger earnings prospects, RHB Research has increased its Binastra Corp Bhd target price to RM3.38 from RM3.10. The Malaysia-based research firm cites a RM6.7 billion outstanding order book as the key driver for this upward revision. Binastra's first half (1H) core profit for the 2027 financial year (FY27) surged 60% year-over-year to RM85.7 million, accounting for 50% and 49% of RHB Research's and the consensus full-year estimates, respectively.
This came after the 2Q FY27 core earnings reached a record high of RM50.6 million. With a further ramp-up in billings anticipated from the RM6.7 billion order book, RHB Research expects the remaining quarters to be at almost similar or higher levels. Management is targeting over RM2 billion in new job wins for FY27, with an internal replenishment target of RM3 billion, as of year-to-date wins of RM819.5 million.
Having clinched RM2.5 billion worth of contracts in Johor Bahru during FY26, Binastra's new focus will be on data centre and renewable energy projects, such as smaller-scale data centres of between 15 and 20 megawatts. Should they secure data centre jobs in Johor, this would serve as a catalyst, as current and prior data centre projects are within the Klang Valley.
RHB Research raised its FY27, FY28, and FY29 earnings forecasts by 13.6%, 9%, and 9%, respectively, after adjusting progress billing assumptions to better reflect the latest revenue trend. The new target price of RM3.38 is derived by pegging FY28 earnings per share to an unchanged 16 times price-to-earnings ratio, with a 2% environmental, social, and governance premium.
Currently trading at 12 times its FY28 price-to-earnings ratio, Binastra is below the Bursa Malaysia Construction Index's five-year mean of about 14 times. This appears justified, given the group's three-year earnings compound annual growth rate of 22% and sizable RM6 billion order book, alongside steady job replenishment trends.
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