PETALING JAYA: Earnings visibility and a growing data centre (DC) order book continue to underpin construction outfit Southern Score Builders Bhd
’s outlook, while a potential re-rating may happen should the company’s stock listing be transferred to the Main Market of Bursa Malaysia next year.
Analysts remain positive on the stock, with both Phillip Capital Research and TA Securities Research maintaining a “buy” call and target prices of 74 sen and 70 sen, respectively.
TA Research added that the stock’s transfer to the Main Market would be a key rerating catalyst, given that it would enhance the stock’s appeal to institutional funds and broaden the investor base.
The research house expects earnings momentum to accelerate in the financial year ending June 30, 2027 (FY27) following a strong performance in FY26.
This would be underpinned by a sizeable unbilled order book and the anticipated ramp-up in project execution.
“We expect both construction and mechanical and construction (M&E) segments to see a meaningful acceleration in order book execution, as a larger portion of their respective backlogs progresses into the steeper phase of the S-curve.
“The construction segment currently carries RM1.05bil of unbilled order book, while the M&E segment has RM590.3mil, with 50% expected to enter the steeper execution phase. The concurrent ramp-up across both segments should translate into stronger revenue recognition and earnings delivery in FY27,” it said.
It expects order book replenishment to pick up in FY27 after a softer-than-expected pace of new job wins in FY26.
Management has targeted RM400mil to RM450mil of construction jobs and RM600mil of M&E jobs, translating into a combined target of RM1bil to RM1.1bil for FY27 and in line with the house’s FY27 new job win assumptions.
In the M&E segment, this would be in addition to the RM251.5mil of M&E jobs already secured in FY27 year-to-date, implying a strong M&E-related order book replenishment visibility and including potential multiple DC-related M&E work that would sustain earnings growth in FY27.
It shared that management remains proactive in evaluating merger and acquisition opportunities within the mechanical, electrical, plumbing and firefighting (MEPF) space to complement its existing M&E capabilities through its 51%-owned SJEE Engineering Sdn Bhd.
This strategy would also enable it to broaden the scope across the DC construction value chain, allowing it to capture a larger share of M&E-related project value, while MEPF capabilities could strengthen the company’s positioning for larger and more integrated packages while providing additional avenues for order book replenishment and margin enhancement.
Phillip Capital Research shared that management has guided for earnings momentum to be sustained at fourth quarter of financial year 2026 (4Q26) levels or better in coming quarters.
“We expect 4Q26 earnings to be sustainable, with 1Q27 earnings expected to remain broadly flat sequentially at around RM21mil, supported by the sizeable order book across both construction and SJEE providing near-term earnings visibility.
