• BNASTRA secured a RM256m contract from EXSIM for its Phase 1 data centre project M&E fit-out

• YTD contract wins of RM2.7bn achieved 90% of our full-year replenishment target. EXSIM is estimated to contribute 70% of the current RM3.5bn order book

• Maintain BUY rating with an unchanged target price at RM2.15

Secured RM256m data centre M&E fit-out contract from EXSIM

Binastra Corporation (BNASTRA) has received a letter of award from Exsim Jalil Link Sdn Bhd (EXSIM) for the design, construction, completion, testing, and commissioning of mechanical and electrical (M&E) fit-out works for Phase 1 of the EXSIM data center. The contract valued at RM256m, will be executed in two phases across two blocks. Phase 1 is targeted for completion within 9 months, and Phase 2 within 24 months from the commencement date, which will be determined upon notification from the project owner.

YTD new wins stood at RM2.7bn

This is a contract upsizing for EXSIM’s Phase 1 data centre project, which was previously secured, effectively bringing the total contract value to RM418m. We estimate this project to contribute RM15–18m PAT across the contract period, assuming a 6–7% PAT margin for M&E contracts that involve outsourcing. YTD contract wins of RM2.7bn are on track to meet our expectations, accounting for 90% of our RM3bn order book replenishment assumption for FY25. Including this contract, BNASTRA’s order book now stands at RM3.5bn, translating to a strong 8.2x cover on FY24 revenue and providing strong earnings visibility over the next four years. We estimate EXSIM to account for 70% of the current orderbook. We remain positive on the client’s project pipeline underpinned by their aggressive expansion plans into Johor and Sabah, which is expected to support sustained order book replenishment momentum moving into FY26.

Reiterate BUY with a higher TP of RM2.15

We make no changes our earnings forecast as this contract win falls within our replenishment assumption. We reiterate our BUY call and 12-month target price of RM2.15, pegged to target 18x 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 - 21 Nov 2024