SkyWorld is seen by analysts as entering an inflexion point after earnings fell to RM5.1 million in 1QFY26 from a peak of RM58 million in 4QFY23 due to earlier launch gaps. HLIB said FY26 is likely to mark the bottom before a recovery phase begins.
HLIB highlights an expected earnings recovery driven by a rebuilt project pipeline, stronger unbilled sales and Penang-led growth, while projecting a 2-year earnings compound annual growth rate of 104.7% as the group moves past its earnings trough.
Hong Leong Investment Bank Bhd (HLIB) initiated coverage on SkyWorld Development Bhd with a BUY call and a target price of RM0.90.
The research house noted that unbilled sales surged 83.8% quarter-on-quarter to RM1.08 billion in 3QFY26, supported by a growing pipeline of six ongoing projects. It added that the group is expected to benefit from faster billings in Penang, driven by prefabricated construction methods, alongside a lean cost structure and larger development base.
Penang was identified as a key growth driver, accounting for 61% of SkyWorld’s remaining gross development value of RM19.81 billion, with projects in Seberang Jaya and Batu Kawan positioned within industrial and affordable housing corridors. Analysts said low land costs and staggered payment structures could support returns while accelerating cash recovery.
HLIB forecasts earnings to rise from RM35.6 million in FY26 to RM149.3 million in FY28, reflecting a strong recovery trajectory. The stock was also trading at undemanding valuations of around six times FY27 earnings and 3.1 times FY28 earnings, based on its forecasts.
While acknowledging that near-term recovery may be gradual due to early-stage project development, analysts maintained that the combination of a rebuilt launch pipeline, innovation in construction methods and Penang expansion positions SkyWorld for a stronger earnings cycle ahead.
As of 10.30 am, the stock rose to RM0.415, gaining 6.41%.
