RHB Research lifts Binastra target price to RM3.38 on stronger earnings outlook

KUALA LUMPUR: RHB Research, which has a "Buy" call on Binastra Corp Bhd, has raised its target price to RM3.38 from RM3.10, citing stronger earnings prospects from higher billings on its RM6.7 billion outstanding order book.

Binastra's core profit for the first half (1H) of financial year 2027 (FY27) rose 60 per cent year-on-year to RM85.7 million, accounting for 50 per cent and 49 per cent of RHB Research's and consensus full-year estimates, respectively.

"Given that the second quarter FY27 core earnings was at a record high of RM50.6 million, we envisage the remaining quarters to be at almost similar or higher than this in light of a further ramp-up in billings from its RM6.7 billion outstanding order book.

"As such, we deem the 1H FY27 results to be above expectations," RHB Research said in a note.

The firm said management is targeting more than RM2 billion in new job wins for FY27, while its own internal replenishment target stands at RM3 billion, with year-to-date wins at RM819.5 million.

"After making a blockbuster debut down south during FY26 by clinching RM2.5 billion worth of contracts in Johor Bahru, Binastra's target for new jobs would now focus more on data centre and renewable energy projects such as large-scale solar.

"In fact, the group is eyeing three data centre jobs which could be of smaller scale of between 15 and 20 megawatts. A catalyst would be if it secures data centre jobs in Johor as the current and prior data centre jobs are within the Klang Valley," it added.

RHB Research raised its FY27, FY28 and FY29 earnings forecasts by 13.6 per cent, nine per cent and nine per cent, respectively, after adjusting its progress billing assumptions to better reflect the latest revenue trend.

"Our new target price of RM3.38 is derived by pegging the FY28 earnings per share to an unchanged target price-to-earnings ratio of 16 times and ascribing a two per cent environmental, social and governance premium," it added.

Binastra is currently trading at 12 times its FY28 price-to-earnings ratio, below the Bursa Malaysia Construction Index's five-year mean of about 14 times.

"We view this to be unjustified due to a three-year earnings compound annual growth rate of 22 per cent backed by a sizable order book of RM6 billion and steady job replenishment trends," RHB Research said.