PETALING JAYA: Integrated engineering and infrastructure services provider Protasco Bhd
is poised for a strong earnings recovery, underpinned by steady growth in its core road maintenance and construction operations, as well as the recent disposal of its underperforming education segment.
In a report titled “20 Jewels 2025 Edition”, RHB Research stated that Protasco’s long-standing track record and comprehensive infrastructure offerings make the group well-positioned for sustainable growth.
The research house noted Protasco’s current outstanding order book stands at RM200mil, primarily driven by the federal road upgrading works in Kulim, Kedah, which will help sustain earnings through 2026.
However, given that its tender book of RM2bil is focused on government infrastructure jobs, RHB Research said it is only factoring in a conservative order book replenishment of RM250mil annually for Protasco’s financial year ending Dec 31, 2025 (FY25) and FY26.
The group is also expected to benefit from a recently approved rate revision for specific periodic road maintenance work, which will take full effect from the fourth quarter of FY24 (4Q24).
“This is expected to elevate the segment’s gross profit margins to the mid-teens, supporting overall profitability and providing a stable recurring income stream.
“The impact of the rate adjustments will be fully reflected in FY25 after some positive impact in 4Q24,” said the research house.
Protasco’s bottom line will also be strengthened by the completed divestment of its education arm in April.
The RM27mil sale of a 90% stake in the unit is expected to significantly improve group profitability following its deconsolidation.
Its property segment, meanwhile, is showing promising signs of recovery, with a turnaround likely in FY26.
Looking ahead, RHB Research believes Protasco stands to gain from potential increases in government spending tied to Malaysia’s Asean chairmanship in 2025 and Visit Malaysia Year 2026 campaign.
With 15,000km of road maintenance concessions and an outstanding RM1.5bil order book in this segment, Protasco is well-positioned to capitalise on these opportunities.
In FY24, Protasco recorded a net profit of RM26.13mil, or a basic earnings per share of 5.42 sen, up from RM6.68mil or 1.39 sen in FY23. Its revenue also increased from RM1.13bil to RM1.31bil in FY24.
The group remains in a net cash position and is expected to strengthen its balance sheet further.
“We forecast a stronger balance sheet on the back of the disposal of the education arm and better profitability into FY25 onwards,” said RHB Research, adding that it anticipates the resumption of dividend payments.
The research house has assigned a fair value of 60 sen to 72 sen per share for the stock, implying an upside of 126% to 171%.
“Following the successful earnings turnaround in FY24, we expect another quantum leap in FY25 earnings to RM29mil,” it added.
