KUALA LUMPUR: Binastra Bhd is expected to sustain its earnings growth, supported by a RM6.2 billion outstanding order book and continued contract replenishment, as it expands into specialised industrial construction following its maiden automated warehouse project, according to AmInvestment Bank Research.
The brokerage expects the group's latest RM303.8 million contract to contribute an estimated RM18.2 million in net profit over its 11-month construction period, based on an assumed net margin of 6%.
In a report yesterday, AmInvestment Bank Research said the award broadened Binastra's construction portfolio while strengthening its earnings visibility.
"The award supports earnings delivery while providing an entry into specialised industrial construction," it said, adding that the contract was within its existing replenishment assumptions.
The contract was awarded by a wholly owned subsidiary of PTT Synergy Group for the construction of an Automated Storage and Retrieval System (ASRS) warehouse facility in Bandar Bukit Raja, Klang.
The scope covers piling works, construction of the main buildings and external works. AmInvestment Bank Research said successful execution would provide Binastra with a reference project for future automated warehouse tenders, potentially opening up further opportunities in the industrial construction segment.
The research unit noted that the latest award brought Binastra's financial year-to-date contract wins for FY27 to RM1.6 billion, equivalent to about 80% of its RM2 billion replenishment assumption.
Its outstanding order book of RM6.2 billion provides earnings visibility for up to three years, supporting its decision to retain existing earnings forecasts.
AmInvestment Bank Research maintained its "Buy" recommendation on Binastra with an unchanged target price of RM3.10, based on 14 times its calendar year 2027 forecast earnings per share of 22 sen.
"The group's established data centre construction and mechanical and electrical fit-out track record, together with its outstanding orderbook supports our valuation," the research house said.
It also expects Binastra's earnings to benefit from its exposure to high-density residential developments in the Klang Valley and Johor, as well as its expansion into data-centre-related solutions through its 51% stake in LF Lansen.
LF Lansen supplies thermal energy storage systems, district cooling plants and buffer tanks for data centres, providing the group with exposure to the growing regional data-centre market.
AmInvestment Bank Research projects Binastra's core net profit to increase from RM133.5 million in the financial year ending 2026 (FY26) to RM182.1 million in FY27 and RM244.5 million in FY28.
Revenue is forecast to rise from RM1.5 billion in FY26 to RM2.26 billion in FY27 and RM2.93 billion in FY28.
However, the research house cautioned that the latest contract's fixed-price lump-sum structure requires disciplined procurement and project execution to achieve the estimated margin.
It identified client concentration, delays in project rollouts, higher building material costs and project cost overruns as key downside risks.