PETALING JAYA: Engtex Group Bhd
will likely be among the beneficiaries of an expected ramp-up in Malaysia’s water infrastructure spending, with major projects offering fresh contract opportunities from 2027.
Kenanga Research said rising water demand from data centre developments should sustain demand for Engtex’s piping products, underpinned by accelerated water capacity expansion and pipe replacement requirements.
Similarly, CGS International (CGSI) Research said the upcoming rollout of major water projects could provide Engtex with about RM1.1bil in potential pipe contracts, supporting its earnings outlook.
“The tenders for mega water projects could open by early next year, in our view, anchoring the group’s financial year 2027 (FY27) forecast earnings and beyond,” the research house said.
CGSI Research added that the upcoming Budget 2027 could provide a near-term positive catalyst for the stock, amid expectations of allocations for water pipe replacement projects.
The research house noted Engtex’s pipe tender book remained strong at RM1.2bil as of its second quarter of financial year 2026, highlighting that it remains well above the calendar year 2025 average of RM592mil, indicating improving demand for water pipes.
Kenanga Research also expects Engtex’s RM2bil tender book to progressively translate into order wins, supported by continued non-revenue water reduction programmes and broader water infrastructure upgrades.
CGSI Research reiterated its “add” call with a 71 sen target price, noting the stock trades at 6.4 times FY27 forecast earnings.
It sees upside from mega water projects and the nationwide pipe replacement cycle, with project rollouts and accelerated pipe replacement serving as key re-rating catalysts.
Additionally, Kenanga Research expects Engtex’s earnings momentum to remain healthy following the second half of financial year 2026, supported by ongoing cost optimisation, a more favourable product mix and progressive conversion of its RM1.1bil tender book.
