PETALING JAYA: Engineering consultancy HSS Engineers Bhd
’s latest wastewater project is expected to raise the company’s profile in the water and wastewater industry further while providing earnings visibility.
The company on Sept 28 announced that its 30%-owned associate, HSS Integrated Sdn Bhd, secured an RM11mil contract to oversee the second phase of Indah Water Konsortium Sdn Bhd’s (IWK) sewage treatment plant upgrading works in Negri Sembilan and Melaka.
Analysts pointed out that this latest contract highlighted the company’s expertise in the water and wastewater industry, besides adding to its order book and earnings visibility, which including the latest project, stands at RM2.2bil with progressive billing over the next eight years.
However, they remained cautious of the company’s outlook.
Apex Research maintained a “buy” recommendation on the stock with an unchanged target price (TP) of 70 sen while Mercury Research reiterated a “hold” call and lowered the TP to 44 sen from 50 sen.
Both research houses flagged geopolitical risks stemming from the company’s overseas projects as well as project delays and cancellations.
Both do not see the latest project as having a large impact on earnings.
Mercury Research, which slashed its earnings forecasts for the financial year ending Dec 31, 2026 (FY26) and FY27 by 12.1% to RM16.6mil and RM19.1mil, respectively, after revising gross profit margins amid geopolitical uncertainties and heightened execution risks, continues to see a supportive medium-term outlook underpinned by the order book.
It noted that replenishment prospects remained healthy with a tender book of RM480mil as of June 2026 and a steady rollout of infrastructure projects under Budget 2026’s RM131.3bil in development-related spending.
The order book remains anchored on project management, which comprises four-fifths of the projects.
It sees potential for the company to secure more projects under IWK’s regulatory-driven upgrading programme.
