PETALING JAYA: Analysts view construction group UUE Holdings Bhd
’s latest contract award positively as it marks UUE’s largest contract value secured in Singapore since its listing.
Apex Securities Research said, in a report to clients, that UUE is expected to sustain the group’s earnings visibility through the financial year ending Feb 29, 2028 (FY28).
Assuming a conservative gross profit margin of 25%, the project is estimated to generate a gross profit of RM16.8mil over the 26-month contract period.
This is expected to translate into RM1.7mil in FY26 (3% of its pre-adjustment FY26 forecast), RM9.1mil in FY27 (12.3% of FY27 forecast), and RM6mil in FY28 (7% of FY28 forecast), it said.
Following this award, UUE’s outstanding order book has increased to RM521.9mil, equivalent to 3.1 times FY25 revenue.
The research house said with this win, Singapore projects now account for 21.4% of UUE’s order book.
It said horizontal directional drilling (HDD) demand in Singapore remains robust, supported by recent wins such as the RM28.1mil SP PowerAssets project and smaller HDD packages totalling RM111.5mil, including the latest RM67.3mil job.
Execution has accelerated, with 10 HDD teams fully deployed since November and lines one and two at the manufacturing facility running at circa 70% utilisation, mainly for internal HDD works.
“We expect earnings recovery from the fourth quarter of FY26, underpinned by stronger execution and better cost absorption. The RM300mil tender pipeline, with about 80% Singapore-based, and UUE’s solid track record positioned it for further wins in Singapore’s HDD market,” Apex Securities added.
In the report, the research house also said following the new contract, UUE’s FY26 order-book replenishment had exceeded its earlier RM273.5mil assumption.
“We raise it to RM347.7mil, while lowering margins for Singapore due to the full HDD scope, compared with earlier material- and service-based jobs.
“Replenishment forecasts for FY27 and FY28 are revised to RM126.7mil and RM293.8mil (from RM243.2mil and RM246mil respectively), reflecting temporary human capital constraints as resources are channelled to ongoing projects.
“Consequently, earnings are raised by 0.7%, 1.7% and 1.5% for FY26, FY27 and FY28, respectively,” it said.
It has upgraded the stock to a “buy” with a higher target price of 67 sen from 58 sen, based on 19 times FY27 earnings per share of 3.5 sen and appraised with a three-star environmental, social and governance rating.
