HSS latest job win backs 70 sen target: Apex Securities

KUALA LUMPUR: HSS Engineers Bhd's latest contract win from Sutracom Sdn Bhd for engineering consultancy and site supervision at Indah Water Konsortium Sdn Bhd's (IWK) sewage treatment plant in Negri Sembilan is likely to contribute RM3.83 million in gross profit.

Apex Securities said the contract adds to HSS' orderbook and reinforces its presence in the domestic water and wastewater segment.

While the RM10.95 million contract is small at the group level, the firm said that the 42-month duration provides additional earnings visibility.

"Assuming a 35 per cent gross profit margin, we estimate the contract could contribute about RM3.83 million in gross profit over its tenure. Given the group's established track record in executing similar consultancy service projects, we believe execution risk on this award is manageable," it said in a note.

The contract entails civil and structural as well as mechanical and electrical engineering consultancy services for the project, together with full-time construction site supervision during the construction period.

The contract commenced on Sept 28, 2026.

The contract lifts the group's order book to RM2.18 billion, representing a 9.9 times coverage of its financial year 2025 (FY25) revenue, alongside a tender book of RM500 million.

"We continue to expect Malaysia's accelerating infrastructure cycle, underpinned by the 2026 Budget's RM81 billion development allocation and a broader RM131.3 billion pipeline spanning transportation, water, rail and renewable energy, to support continued order book replenishment into FY26-FY28, alongside the group's ongoing diversification into higher-value recurring income streams such as solar, digital/AI and international contracts," it added.

The firm noted the upcoming 2027 Budget could also be a potential catalyst for the group, with further infrastructure and development allocations likely to sustain HSS' order book momentum going into FY27.

Apex Securities kept "Buy" on the stock with an unchanged target price of 70 sen.