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.

Kenanga Research said the company has an order book of RM2 billion and a tender book of RM5 billion.

It valued Vestland at a price-to-earnings ratio target of 16 times its FY27 earnings to derive a fair value of RM1.20.

"Despite its smaller market capitalisation, we assign a mid-cap construction valuation multiple of 16 times to reflect its strong near-term earnings growth profile," it said in a note.

Kenanga Research noted that Vestland sets itself apart in the construction sector by leveraging a specialised design-and-build model, positioning itself as an end-to-end solutions provider rather than a conventional contractor.

Additionally, the firm said Vestland's net margin bottomed out at 4.5 per cent in FY25, down from eight per cent in FY23, due to higher material and fuel costs, alongside a project mix shift toward larger contracts with tighter margins.

However, profit margins are expected to rebound moving forward, driven by accelerated cash collection cycles from public infrastructure contracts, a superior margin mix for public sector work versus private projects and a rising share of public sector jobs.