PETALING JAYA: Fresh off a RM14.5mil data centre (DC) subcontract win, ISF Group Bhd enters the second half of the year with a healthy order book and growing exposure to one of Malaysia’s fastest-expanding construction sub-sectors.
According to Apex Research, ISF’s wholly-owned subsidiary Yeo Plumber Sdn Bhd has been awarded a sub-contracting work contract by an established Malaysian-based construction company, which amounted to RM14.5mil.
“The sub-contract work consists of internal sewerage works, including testing and commissioning, for a DC,” the research house noted.
Apex Research added that the end-to-end piping solutions provider is set to commence work immediately, with a completion date scheduled for March 26, 2027.
The research house pointed out its favourable view on the group’s contract award highlighting its ability to secure projects across multiple segments, thereby enhancing earnings visibility through financial year 2029 (FY29).
“Assuming an estimated 25% profit margin, the project is expected to contribute RM3.6mil in profit over its duration, representing 9.8% of our FY26 profit forecast.
Additionally, Apex Research noted the group’s established track record in executing comparable projects, hence execution risk should remain well-contained.
At the same time, the research house said ISF’s growing scale and accumulated project experience in DCs may further strengthen delivery capabilities.
Apex Research has maintained its “buy” call on ISF with an unchanged target price of 62 sen.
Moreover, the research house based this on a price-to-earnings multiple of 18.7 times applied to its FY27 forecast earnings per share of 3.3 sen, alongside a three-star environmental, social, and governance rating.
On the group’s prospects, the research house said ISF’s earnings outlook remains resil- ient, supported by a healthy RM153.5mil order book, which translates into a book-to-bill ratio of 1.3 times FY26 revenue and provides strong earnings visibility, going forward.
It added that on the assumption of a monthly burn rate of RM10.2mil, ISF is estimated to secure approximately RM72.5mil in new contract awards year-to-date.
Alongside a projected tender pipeline of approximately RM428.2mil still outstanding, the group is on track to meet the research house’s full-year target of RM150mil in new contract wins.
Notably, Apex Research said the growing importance of water and sewerage infrastructure in DC operations bodes well for ISF, as specialist piping subcontractors are increasingly sought after for such projects.
“Cooling, one of a DC’s largest operational loads, increasingly relies on liquid cooling systems, which require extensive piping installed by plumbing contractors, along with sewerage systems to manage resulting wastewater.
“In 2023, DCs directly consumed about 17 billion gallons of water for cooling in, with hyperscale facilities using up to five million gallons daily, a figure that could double or quadruple by 2028 amid artificial intelligence or AI-driven expansion,” it explained.
