RHB Research has raised its target price for Binastra Corporation Bhd to RM3.38 from RM3.10 and maintained its BUY call, after the construction group delivered record quarterly earnings and continued to build exposure to data centres and renewable energy projects.
Binastra’s 1HFY27 core profit rose 60% year-on-year to RM85.7 million, accounting for 50% of RHB’s full-year forecast and 49% of consensus estimates. The research house nevertheless deemed the results above expectations as it anticipates stronger billings in the coming quarters from the group’s RM6.7 billion outstanding orderbook.
Second-quarter core profit jumped 78% year-on-year to a record RM50.6 million, supported by higher contributions from LF Lansen, which is involved in thermal energy storage, together with new construction activities including solar installation and data centre projects.
Revenue from data centre and residential jobs tripled to RM560.8 million in 2QFY27, while the group’s core net margin improved to 7.7% from 7.2% a year earlier.
RHB said stronger progress at conventional construction projects, particularly in Johor, helped offset the lower margins typically associated with data centre and solar works.
Looking ahead, Binastra is targeting more than RM2 billion in new job wins in FY27, while RHB’s own replenishment assumption stands at RM3 billion. Year-to-date FY27 contract wins currently amount to RM819.5 million.
After securing about RM2.5 billion worth of contracts in Johor Bahru during FY26, the group is now placing greater emphasis on data centres and renewable energy projects, including large-scale solar.
RHB said Binastra is currently eyeing three data centre jobs of between 15MW and 20MW each, with potential contract wins in Johor seen as a catalyst given that its current and previous data centre projects are concentrated in the Klang Valley.
The group is also aiming to rebalance its orderbook mix towards a 50:50 or at least 60:40 split between conventional construction and newer segments such as data centres, engineering, procurement, construction and commissioning for sewage treatment plants, and green energy projects. The current split is about 70:30.
RHB lifted its FY27-FY29 earnings forecasts by 13.6%, 9% and 9% respectively, after revising progress billing assumptions in line with recent revenue trends.
Its new RM3.38 target price is based on an unchanged 16 times FY28 forecast earnings multiple, with an additional 2% ESG premium.
The stock is trading at around 12 times FY28 forecast earnings, below the Bursa Malaysia Construction Index’s five-year average of about 14 times, a discount RHB views as unwarranted given its projected 22% three-year earnings CAGR from FY26 to FY29, sizeable orderbook and steady contract replenishment.
RHB said weaker-than-expected job replenishment remains the key downside risk.
