PETALING JAYA: Azam Jaya Bhd, a Sabah-based construction firm, is expected to be a a direct proxy in Sabah’s infrastructure boom, driven by increased government spending in the state, says Affin Hwang Investment Bank Research (Affin Hwang Research).
The research house noted that under Budget 2025, the government had allocated RM6.7bil, or 7.8% of the total development expenditure, to Sabah, the highest in four years.
Additionally, the research house said RM13bil was earmarked for 488 infrastructure projects, including roads, bridges, and buildings, and an additional RM5bil specifically for rural development under the budget.
As a result, Azam Jaya is “well poised to leverage on elevated infrastructure spending”, the research house said.
Azam Jaya currently holds an outstanding order book of RM1.45bil, primarily focused on four packages within the Pan Borneo Highway project, totalling RM1.34bil in contract value, or 92% of its order book.
Affin Hwang Research said three of thee packages were awarded in 2024 and are anticipated to be completed between 2027 and 2028.
“Its RM1.45bil order book is set to sustain revenue over the next four years, and any additional wins provide upside,” the research house noted, adding that Azam Jaya could become a beneficiary of additional phases of the Pan Borneo Highway.
As a key player in road infrastructure, Azam Jaya’s primary clients include the Sabah Public Works Department (JKR) and the Works Ministry.
The research house pointed out that since 2001, Azam Jaya had been awarded RM2.3bil in major infrastructure projects by JKR Sabah and RM823mil in contracts by the Works Ministry.
Azam Jaya aimed to raise RM61.5mil through its Main Market initial public offering (IPO) today.
Of this, RM28.4mil (46.2%) is allocated for working capital, with the remainder primarily directed toward reducing bank borrowings and acquiring new equipment.
Affin Hwang Research noted that the IPO price of 78 sen per share implied a 2023 price-earnings ratio of 15 times.
