KUALA LUMPUR: Hartanah Kenyalang Bhd’s earnings are expected to grow at a two-year compound annual growth rate (CAGR) of 16 per cent, according to Public Investment Bank Bhd (PublicInvest).
In a note, the firm said this will be supported by a robust order book and continued government infrastructure spending in Sarawak.
“We derive a fair value of RM0.22 by applying 11 times the forecast price-to-earnings ratio (PER) for financial year 2026 (FY26), which represents an approximately 20 per cent discount to the forward PE multiple of 14 times for Bursa’s Construction Index.
“This account for the group’s positive outlook but relatively smaller scale of business,” it noted.
Going forward, PublicInvest said key downside risks for the group include dependency on government spending in Sarawak, competition, and reliance on labour and subcontractors.
Hartanah Kenyalang is a Sarawak-based construction services firm, well-positioned to benefit from steady construction growth in the state.
Through its subsidiary, the group is principally involved in building construction services, focusing on institutional buildings such as schools and other public buildings, as well as other non-residential buildings, and infrastructure construction services, particularly bridges and roads.
According to PublicInvest, the group is qualified to undertake high-value building and infrastructure construction services for government projects, mainly for public buildings, bridges and roads in Sarawak.
The group plans to capitalise on Sarawak’s RM10.9 billion development budget for 2025 and continue bidding for public sector projects, including schools and other purpose-built buildings, high-rise buildings, bridges, roads, and substations.
Besides enhancing operational capacity and efficiency, the group also aims to expand its design and build services through building information modelling (BIM) investment.
Between FY21 and FY24, Hartanah Kenyalang’s net profit increased from RM4.8 million to RM9.2 million, registering a CAGR of 24 per cent in line with higher revenue.
However, the net profit margin declined from 14 per cent in FY22 to seven per cent in FY24, while the gross profit margin decreased from 24 per cent in FY21 to 18 per cent over the same period.
The decline was primarily due to the completion of the higher-margin Pan Borneo Highway Project, coupled with rising costs for construction materials, subcontractors, staff costs, finance costs and other operating expenses.
The group is seeking a listing with an enlarged issued and paid-up share capital of 620 million shares on Bursa Malaysia’s ACE Market.
Pursuant to the initial public offering (IPO) listing, the group’s market capitalisation is RM99.2 million based on its IPO price of 16 sen.
© New Straits Times Press (M) Bhd
