Vestland's RM2bil order book to drive earnings growth: Kenanga Research
KUALA LUMPUR: Vestland Bhd is expected to post earnings of RM49.4 million and RM77.5 million in the financial year 2026 (FY26) and FY27, respectively, backed by its outstanding order book and tender book.
Vestland Bhd is set to achieve earnings of RM49.4 million and RM77.5 million for financial years 2026 and 2027 respectively, bolstered by a substantial RM2 billion order book and RM5 billion tender book. Kenanga Research has assigned the company a price-to-earnings ratio target of 16 times its FY27 earnings, estimating its fair value at RM1.20.
Despite a smaller market capitalization, Vestland is considered a mid-cap construction firm, with a valuation multiple of 16 times reflecting strong near-term earnings growth. The company's design-and-build model and end-to-end solutions provider approach sets it apart in the construction sector, differentiating it from conventional contractors.
Although net margins hit a low of 4.5% in FY25, down from 8% in FY23 due to increased material and fuel costs and a shift towards larger contracts with tighter margins, profit margins are anticipated to improve in the future. Accelerated cash collection cycles from public infrastructure contracts, a superior margin mix for public sector work compared to private projects, and a growing share of public sector jobs are expected to contribute to this improvement.
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