PETALING JAYA: Southern Score Builders Bhd
’s (SSB) earnings outlook is anticipated to be favourable backed by its strong order book, says Kenanga Research.
According to the research house, the management contractor commands strong margins by outsourcing construction work to other companies.
“SSB has also been able to procure building materials in bulk, and often in cash terms, at highly competitive rates,” it said.
It is mainly into high-rise residential buildings in Kuala Lumpur and civil works such as road and drainage, and water reticulation and sewerage package works.
SSB was established last November after the reverse takeover of G Neptune Bhd by class G7 contractor Southern Score Sdn Bhd with a profit guarantee of RM80mil over 2022 to 2024.
The group had completed RM738mil worth of projects as of March 2023.
Its outstanding order book worth RM638.5mil with a tender book of RM634mil is expected to augur well for the group and keep it busy for the next two to three years.
Additionally, the group’s decision to remain asset-light has enabled it to register a strong gross margin of 20% over financial year 2019 (FY19) to FY21 and post-reverse takeover, 19% to 24% between 1Q23 and 3Q23.
It is also exploring opportunities in Industrialised Building System (IBS) manufacturing through its 35% owned associate TCS SS Precast Construction Sdn Bhd.
The group is currently exploring project viability and economic benefit of setting up an IBS manufacturing plant in Batu Caves and has earmarked RM21.8mil of the proceeds raised from the reverse takeover exercise.
“In June 2023, SSB signed a deal with MCC Overseas (M) Sdn Bhd and Guangdong Bright Dream Robotics Co Ltd with the intention to form a partnership to implement and develop robotic construction technologies in Malaysia. This would help to improve its profit margin in the future should it materialise,” the research house noted.
It expects the group’s earnings to grow steadily moving forward.
