SkyWorld Development Bhd was maintained at BUY by Hong Leong Investment Bank Bhd (HLIB) with an unchanged target price of RM0.90, with analysts saying FY26 results were below expectations mainly due to an unusually high effective tax rate, but that earnings recovery is expected to strengthen from FY27 on a larger project pipeline and stronger unbilled sales.
HLIB said SkyWorld’s 4QFY26 core net profit of RM4.2 million brought FY26 full-year earnings to RM33.1 million, down 38.3% year-on-year and below expectations as it accounted for 92.9% of internal forecasts and 83% of consensus estimates. The research house highlighted that the miss was largely driven by a 70.5% effective tax rate in the quarter which sharply weighed on bottom-line performance despite stable operational trends.
Revenue was supported by multiple ongoing projects over the year, though margins were mixed due to changes in project mix and cost revisions in selected developments. HLIB maintained its BUY recommendation with an unchanged target price of RM0.90, citing expectations that tax normalisation and stronger project launches will drive earnings recovery.
The research house noted that SkyWorld’s earnings were also affected by softer margins from lower-margin product mix and higher costs in certain developments, even as FY26 revenue was supported by a broader base of active projects compared with the previous year. It added that unbilled sales of RM1.07 billion remain healthy, providing 2.5 times coverage of FY26 development revenue and supporting visibility into FY27.
HLIB said the group is entering a new earnings cycle driven by upcoming launches exceeding RM2 billion in gross development value across Malaysia, Vietnam and Batu Kawan, which are expected to underpin a stronger earnings trajectory going forward.
As of 12.07 pm, the stock price decreased by 5.75% to RM0.41.
