• BNASTRA secured a RM68m sewage treatment plant redevelopment project in Cheras, KL

• YTD contract wins of RM2.8bn achieved 93% of our full-year replenishment target, on track to meet our expectations

• Maintain BUY rating with an unchanged target price at RM2.15 (based on 18x PE multiple on FY26E EPS)

Secured RM68m sewage treatment EPCC contract

BNASTRA has received a letter of award from F3 Cheras Development Sdn Bhd for redeveloping a sewage treatment plant in Cheras, KL. The contract involves a full scope of engineering, procurement, construction, and commissioning (EPCC) works, which includes decommissioning the existing sewage facilities and upgrading the sewage pumping station. This contract, valued at RM68m, is slated to commence once the site is handed over by the project owner, with a target completion timeline of 36 months.

YTD new wins totalled RM2.8bn

We estimate this project to contribute RM4–5m PATAMI over the contract period, assuming a 6–7% project margin typical of EPCC outsourcing contracts. With this latest win, BNASTRA has secured a YTD contract win of RM2.8bn, accounting for 93% of our RM3bn order book replenishment target for FY25. BNASTRA’s latest order book stands at RM3.5bn, providing solid 8.2x revenue cover and earnings visibility over the next four years. We remain confident that BNASTRA will secure an additional RM200m in new contracts to meet our RM3bn new order assumption, supported by strong tender pipelines.

Reiterate BUY with 12-months TP of RM2.15

We do not change our earnings forecast as this contract win falls within our replenishment assumptions. We reiterate our BUY call and 12-month target price of RM2.15, pegged to target 18x PE multiple on FY26E EPS. 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 - 28 Nov 2024